As the UK commits to spending 5% of GDP on national security, and with NATO partners scaling up their own defence budgets, a generational opportunity is taking shape: to rethink how defence investment can drive not just military capability, but also economic growth, productivity, and innovation.
The Defence and Economic Growth Taskforce was created to explore how the UK could turn rising defence spending into a broader economic opportunity. Co-led by Oliver Wyman and the Confederation of British Industry, it brought together a diverse group of voices from finance, industry, government, and academia. Over 12 weeks, the group developed a set of practical recommendations aimed at turning defence into a driver of investment, innovation, and growth.
This work comes at a critical time. The defence industry already supports one in every 60 UK jobs, yet its economic contribution has remained flat. Meanwhile, global threats are evolving, and governments are responding with larger budgets and bolder ambitions. In the UK, momentum is building — there’s growing public support for defence investment, and a clear opportunity for the private sector to play a more active role. For the Taskforce, the challenge was clear: to build on what’s already in place and offer a joined-up approach that makes it easier for capital, ideas, and talent to flow into the sector.
Two priorities sit at the heart of the recommendations. The first is a strengthened demand signal. Investors and industry alike need confidence in the future. A long-term Defence Investment Plan — one that sets out what the government plans to buy, when, and with what funding — would provide exactly that. Other countries have already adopted this model with success, for example Australia’s Force Structure Plan. This provides consistent, multi-year signals that give industry and investors the clarity they need to plan.
The second priority is a reset national public dialogue. Defence is still too often viewed in narrow terms. To unlock its full value, the UK needs to reframe it as a key part of its economic strategy — not just a cost centre, but a source of jobs, exports, and innovation. That shift will take more than a new message. It requires visible, coordinated leadership across government, business, and academia.
The recommendations that follow are designed to support that shift in both mindset and practice.
The Taskforce identifies four priorities to boost UK defence-led economic growth
The Taskforce’s recommendations are grouped into four outcomes that support a stronger, more productive defence economy.
Deploy defence spending as an economic force multiplier
While defence budgets are increasing, much of the economic value continues to flow overseas. The report highlights the need for procurement decisions to consider wider economic benefits, such as job creation, skills development, and intellectual property retention. Supporting small and mid-sized businesses is a central part of this approach, as is unlocking the commercial potential of dual-use technologies, particularly in fast-moving fields like AI, quantum, and cyber.
Improve the attractiveness and international competitiveness of defence companies
Boosting the UK’s presence in global defence markets requires a more coordinated, proactive approach to exports. The Taskforce recommends the creation of a new Defence Exports Office to support trade relationships, promote UK capabilities, and embed export considerations into early-stage procurement planning. Additional proposals include embedding exportability into procurement decisions and capability design from the outset, making it easier for UK firms to meet the needs of allied and partner nations. The Taskforce also calls for the UK to play a stronger role in international procurements and to deepen government-to-government partnerships that can support export growth.
Mobilise trusted private sector investment
Mobilising higher volumes of trusted private sector financing and investment is crucial for increasing capacity in the sector and driving growth. The report calls for clearer guidance, improved transparency, and stronger dialogue between government and institutional investors. Public financial bodies, including the British Business Bank and the National Wealth Fund, also have a role to play in supporting innovation and unlocking new sources of growth. With better coordination, the UK can position itself as a leading hub for strategic defence investment internationally.
Attract finance to build a resilient and aligned defence supply chain
A strong industrial base depends on a modern, agile supply chain. The report recommends targeted investment in regional clusters, test and evaluation facilities, and skills development programmes. Supply chain finance also needs to be strengthened to ease liquidity constraints for smaller firms. In parallel, the UK should seek partnerships with international allies — including Ukrainian Defence SMEs — to learn from recent models of rapid, decentralised innovation. These efforts will help build a more flexible and resilient defence economy that benefits regions across the UK.
The Taskforce’s recommendations are built to work with existing government strategies and help move them further, faster. They focus on what can be done now to create impact, both in the short term and over the long run. With clearer signals to the market, better coordination between sectors, and a stronger focus on the economic potential of defence, the UK has a real opportunity to build a sector that not only protects the country but helps power its future growth.
