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On 26th March, Chancellor of the Exchequer, Rachel Reeves MP delivered HM Government’s Spring Statement. The statement acts as an economical bellwether on performance in conjunction with forecast delivery from the Office of Budget Responsibility (OBR).
HM Government has committed to providing one fiscal update a year, this is the Autumn Statement, which is the Budget, although further updates on public finances will take place in June with the Spending Review.
The key takeaways from the speech delivered to the House of Commons was the restoration of public finances through cutting interest rates, investing in the NHS and public services, the OBR highlighting the current budget surplus will be restored to £9.9 billion in 2029-30, and a reduction in debt interest payments. The OBR is forecasting 1.9% GDP growth next year.
Defence was a major feature, with the reiteration of spending in this area rising to 2.5% of GDP by 2027 and an additional £2.2 billion in the next Financial Year.
Whilst there were no specifics on advanced manufacturing or the South West, the Chancellor focussed heavily on defence and technology.
Rachel Reeves MP commented: “I will now set out the immediate steps that we are taking to boost Britain’s defence industry and to make the UK a defence industrial superpower. We will spend 10% of the Ministry of Defence’s equipment budget on new novel technologies, including drones and AI-enabled technology, driving forward advanced manufacturing production in places like Glasgow, in Derby, and in Newport, creating demand for highly skilled engineers and scientists and delivering new business opportunities for new tech firms and startups.”
In the details of the statement, it went further to state that MOD would be looking at the procurement of innovations such as dual-use technologies, uncrewed, and autonomous capabilities.
This would be supported by a ‘protected’ budget of £400 million to ensure these types of technologies are delivered quickly to the frontline. As previously reported by WEAF, the government has announced further plans to launch a new hub which will provide SMEs with improved access to the defence supply chain (see here); whilst not directly referenced, Reeves did state that smaller businesses will be granted better access to MOD contracts.
The Chancellor went further to note that HM Government will provide £2 billion of increased capacity for UK Export Finance. This will enable loans for foreign buyers of UK defence goods and services.
“I want to do more with our defence budget. So, we can buy and make and sell things here in Britain, giving further opportunities for our world leading defence companies and those who work in them to grow and create jobs here in Britain, as military spending rightly increases all across Europe to oversee all of this vital work.”
The South West region features the UK’s largest aerospace cluster and the second largest in Europe, encompassing diverse industries, capabilities, facilities, and skills. Major aerospace and defence primes in the area include Airbus, BAE Systems, Boeing, Rolls Royce, Leonardo, amongst others (most of which are attending the WEAF Annual Conference & Expo on 30th April), and are supported by numerous SMEs.
With the new Defence Hub enhancing SME access to contracts, MOD procurement budgets focussing on innovative technologies, and 2.5% of UK GDP allocated to defence, there are significant opportunities to buy, make, and sell defence technology by and from the South West.
Sources:
CP1298 – Spring Statement 2025