Overview
The UK Ministry of Defence (MOD) published its Strategic Defence Review (SDR) in June 2025 and has taken a positive step toward reinvigorating the UK defense posture. The SDR made clear that the UK is not ready for modern warfare and set an ambitious plan to reform UK defense. The report offers 62 recommendations to correct deficiencies within UK defense.
However, as in all UK defense reviews, funding will be the key to implementing the recommendations and the government announced that defense spending will rise to 2.6% of GDP from 2027, with an ambition to reach 3% in the next Parliament when economic and fiscal conditions allow.
In the SDR, the MOD acknowledged that it needs to create a new partnership with industry to transform its procurement processes and to develop a resilient UK industrial base that can scale. During the acquisition process, the MOD will now normalize the exportability of its acquisitions, and the MOD will also prioritize international capability partnerships.
To help the UK defense industrial base grow, the UK Defence Exports group, currently residing with the UK Department for Business and Trade, will become part of the MOD to create a framework for government-to-government relationships. In the future, UK Defence Exports may evolve into an organization something similar to a version of the U.S. Defense Cooperation Agency, the U.S. agency responsible for foreign military sales and similar security cooperation programs.
The UK defense sector is also waiting for the release of a ten-year Defence Investment Plan, due in the Fall of 2025, which will replace the previous Defence Equipment Plan, and the new plan will outline detailed spending commitments, priority acquisition programs and timeline equipment acquisition.
Historically, defense cooperation between the U.S. and the UK is well established, and the UK is considered a Tier one partner. As such, the UK has significant military capability and seeks to augment its current capability with the latest technology available. Most technology, if acquired from the U.S., requires an ITAR license, and new suppliers need to be familiar with the licensing application process (Title 22 Part 126 and section 126.7 for exemptions).
In the 2024/25 financial year, the UK spent $79.9 billion on defense. Spending plans set out in the 2025 Spending Review show that defense spending is expected to total $82.6 billion in 2025/26, increasing to $97.6 billion in 2028/29. This is equivalent to an annual average real-terms growth rate of 3.8% over this period.
The UK is one of the top NATO countries in terms of defense spending. As a member of NATO, the UK is committed to spending at least 2% of GDP on defense expenditure that meets NATO’s definition each year. The latest NATO estimates show that the UK is expected to spend 2.4% of GDP on defense in 2025. The government committed to increase defense spending, according to the NATO definition, to 2.5% of GDP by 2027, or 2.6% of GDP when including additional elements of security and intelligence spending. It has since further committed to increase spending to 3.5% of GDP by 2035, in line with a new NATO target.
The UK Government has determined that all public contracts awarded to suppliers need to demonstrate “Social Value,” which score is determined by how the contract award can create jobs, promote local businesses, improve health and well-being, reduce carbon emissions, and support communities in the UK. Social Value accounts for 10% of the score, rising to 25% at the contacting officer’s discretion, when contracts are evaluated and all U.S. suppliers competing for defense contracts need to demonstrate Social Value to remain competitive.
In September 2025, the UK Government announced that the government will introduce an offset policy. This means that whenever the UK Government awards a contract to overseas suppliers, the UK Government will ensure that the British economy is strengthened in return through new jobs and novel technologies. This offset policy will sit alongside the current “social values” program, and it is intended to incentivize foreign suppliers to make long-term investments in the UK.
Leading Sub-sectors
The UK MOD has highlighted the following areas:
Naval
Maritime security is a strategic imperative for the UK. To meet the demands of a new era of threat, the Royal Navy plans to evolve towards a dynamic mix of crewed, uncrewed, and increasingly autonomous surface and sub-surface vessels and aircraft. It plans to develop next-generation capabilities such as SSN attack submarines via the trilateral AUKUS partnership. The Royal Navy will continue to move towards a more powerful but cheaper and simpler fleet, developing a ‘high-low’ mix of equipment and weapons that exploits autonomy and digital integration.
In the future, the Royal Navy will develop a ‘hybrid’ carrier airwing, comprising crewed combat aircraft, autonomous collaborative platforms in the air, single-use drones, and, eventually, long-range missiles capable of being fired from the carrier deck. The Royal Navy will also explore developing an integrated frigate force for anti-submarine warfare, comprising crewed, uncrewed, and autonomous platforms.
The UK maintains four Ballistic Missile Submarines (SSBN, Ship Submersible Ballistic Nuclear) so that at least one will always be on a Continuous At Sea Deterrent patrol. The Defence Nuclear Enterprise (DNE) is responsible for maintaining the UK’s nuclear deterrent and submarine forces. However, as DNE’s costs continue to rise, there is a risk that these increases will squeeze the budgets for conventional capabilities.
Ground Forces
The British Army’s strategic target is to double its fighting power by 2027 and treble it by 2030, identifying autonomous and uncrewed (land and aerial) systems as now an essential component of land warfare to be integrated with core armored platforms in a dynamic ‘high-low’ mix of capability. To accomplish this mix, the British Army is exploring a ‘20-40-40’ solution equating to 20% crewed platforms, 40% ‘reusable’ platforms (such as drones that survive repeated missions), and 40% ‘consumables’ such as rockets, shells, missiles, and ‘one-way effector’ drones.
The British Army’s goal broadly encompasses a push toward modernization, which could involve enhanced precision weaponry, digital integration, improved mobility, and advanced reconnaissance technologies. They will continue to rely on the RAF’s transport and attack helicopter fleet for combat effects. To ensure interoperability and efficiencies of scale, the British Army will likely seek collaboration with NATO Allies on the acquisition of key land platforms.
Air
The Royal Air Force (RAF) is responsible for Combat Air (fast jets), Intelligence Surveillance and Reconnaissance (ISR), remotely piloted aircraft (drones), strategic and tactical air transport and air-to-air refueling aircraft.
The RAF is a premier European combat air contributor to NATO and F-35 consortium partner who is keen to remain at the leading edge of combat air’s evolution through a transition from exclusively crewed combat air platforms (Typhoon and F-35) to a Future Combat Air System (FCAS) which will be a mix of crewed, uncrewed, and increasingly autonomous platforms.
With the return of state-on-state conflict in Europe, the RAF desires to improve its productivity, agility, and its adaptability to build greater readiness. To do this, the RAF plans to work with industry and allies to sustain the air domain sector and exploit emerging technology, including through partnerships such as the Global Combat Air Program (GCAP).
The RAF plans to enhance its warfighting readiness by maintaining E-7 Wedgetail airborne early warning and control aircraft. The RAF is looking to buy additional E-7 aircraft when funding allows and to provide Protector (Remotely Piloted Air System) with a maritime surveillance capability that is integrated with P-8 Poseidon maritime control and reconnaissance aircraft and Type 26 frigates.
Munitions
The UK’s munitions strategy is part of the Strategic Defence Review 2025 and aims to boost domestic production through a $8 billion investment in munitions, including $2 billion for an “always on” pipeline and the construction of at least six new munitions factories in the UK. BAE Systems remains a strategic domestic supplier and is the leading manufacturer of munitions in the UK.
Up to 7,000 long-range weapons will be built in the UK to enhance military capabilities, with a focus on deterrence and lessons learned from the war in Ukraine. In March 2025, the UK Government announced that the Thales missile factory in Belfast will supply 5,000 lightweight multirole missiles to Ukraine.
Space
USpace is a critical UK national infrastructure sector, a site of growing competition, and a domain that is central to warfighting. Nearly 20% of UK GDP is reliant on satellite services and disruption to GPS would cost the UK economy an estimated $10 billion a day. Assured access to operate in, from, and through space underpins the UK’s security and prosperity.
The UK seeks acquiring capabilities that will assure its access to space, both on a sovereign basis and with NATO and other key allies and to develop the resilience of its military space systems. The MOD prioritizes space control, space ISR, and space domain awareness capabilities.
The UK is seeking to create redundancy for accessing space and this will increasingly be delivered through commercial systems. To ensure access to space, the UK plans to focus on Space Domain Awareness (such as Earth-based sensors), command and control, and counterspace systems (both co-orbital and Earth-based).
Opportunities
The UK defense industry is sophisticated and mature and defense suppliers looking to export into the UK can expect to find a highly competitive environment and must demonstrate a clear competitive advantage. A company with non-British ownership or without a presence in the UK is not necessarily at a competitive disadvantage compared with British firms seeking MOD business. However, a U.S. company must commit both time and resources to enter or expand within the UK defense market. Selling through an established UK company is the least risky market entry strategy for most U.S. defense providers to enter the UK defense supply chain.
Through the Defense and Security Accelerator, the MOD frequently holds industry engagement days and competitions to evaluate equipment and technology. The best way for U.S. companies desiring to engage in meaningful dialogue with the MOD is through these MOD-sponsored industry days and competitions. For announcements on MOD events relevant to a particular defense sector, suppliers should consistently monitor announcements on the Defense and Security Accelerator website.
Resources
Defense Sourcing Portal
The MOD’s Defense Sourcing Portal (DSP) is the official source of UK MOD contracts, providing instant access to all contract opportunities in one place. You can contact DSP at customersupport@jaggaer.com.
Defense Science and Technology Laboratory
The Defense Science and Technology Laboratory (Dstl) ensures that innovative science and technology contribute to the defense and security of the UK. To contact Dstl, send an email to centralenquiries@dstl.gov.uk or call +44 198 095 0000.
Defense and Security Accelerator
The Defense and Security Accelerator (DASA) finds and funds exploitable innovation to support defense and security quickly and effectively. Its mission is for the UK to maintain its strategic advantage over its adversaries through the most innovative defense and security capabilities in the world.
For further information, please contact:
PJ Menner, Commercial Specialist, U.S. Commercial Service, Tel: +44 (0)20 7891 3470