Defence sector to see £2 billion uplift

Chancellor of the exchequer Rachel Reeves will boost the UK’s defence sector by £2 million, which will benefit UK defence companies that export overseas, driving economic growth and creating jobs across the UK.

Rachel Reeves will announce this boost on a visit to Scotland today (14th March 2025), which will increase the UK’s Export Finance’s (UKEF) Direct Lending capacity for defence. Defence opportunities for UK defence exports like missiles, aircraft and armoured vehicles overseas will thus be unlocked.

This uplift will subsequently increase the UKEF’s lending capacity from £8 billion to £10 billion, increasing the competitiveness of the UK’s defence industry. This will increase exporters’ businesses through sales to global allies, bolstering supply chains.

UKEF’s Direct Lending function provides loans to other governments to buy goods and services from the UK, and in 2023-24 the UK supported 650 exporters from £8.8 billion worth of loans, guarantees and insurance.

This news follows the recent announcement of a £1.6 billion commitment to supply thousands of advanced air defence missiles to Ukraine, which will boost the UK economy and further support 700 existing jobs at Thales in Belfast.

Rachel Reeves commented: “The world is changing, and we must bring about a new era of security and renewal that projects working people and keeps our country safe. This increase to UKEF’s lending capability is our Industrial Strategy in action, bolstering our defence industry and supply chains, creating jobs and driving growth across the UK.

“This is alongside an increase in our defence spending to 2.5 per cent of GDP. We are strengthening our national defence, kickstarting economic growth and delivering the stability we need to keep us safe.”