The Implications of The Governments Pledge To Increase Defence Budget To 2.5% of GDP

The Implications of The Governments Pledge To Increase Defence Budget To 2.5% of GDP
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The Implications of The Governments Pledge To Increase Defence Budget To 2.5% of GDP

The Government has announced at the recent NATO conference, the largest boost to the UK’s defence in a generation. The Prime Minister stated that the defence budget would be 2.5% of GDP by 2030 with a fully funded plan to back up his statement. 

“We are at a turning point in European security” said Sunak speaking alongside NATO Secretary-General Jens Stoltenberg in Poland, Sunak also urged allies of the UK to also step up their defence

Axis states such as Russia, Iran and China are becoming an increasing threat to our democracy and are pouring money into their own military and developing their cyber capabilities.

The Government are already committing record investment in defence and the armed forces but the Prime Minister has said that “we must take further action now to deter these growing threats”, the investment is to protect the people of the UK and their livelihoods.

The largest Defence spend in a generation

UK defence spending will increase immediately and then rise steadily to reach £87 billion by the end of the decade – hitting 2.5% of GDP by 2030. 

One of the main areas of investment will be in munitions production, which, in turn, will generate plenty of investment across the whole of the UK and also higher quality jobs to guarantee that the UK has a quick manufacturing capacity and large reserves of modern weaponry.

Research & Development

Research & Development is a key component of military investment and the Government has chosen to invest at least 5% of the defence budget into this sector as the Prime Minister mentioned earlier about the growing threats, it is key to stay ahead of these to keep the UK safe

Defence sources say it will enable the UK to build up its own stockpiles of ammunition, especially of artillery shells and missiles.

The additional funding will be a huge boost to the Air force, Navy and nuclear sectors as this will allow them to fund new investments and grow.

Supply and demand of products

With this increase in Defence budget, there will likely be a surge in demand for various military equipment, technologies, and services to meet the expanded needs of the armed forces.There are a multitude of products and services that will be in higher demand now that there is more investment in the Defence sector.

Products that are MIl-Spec will be highly sought after such as Approved heat shrink. As with this investment, the money won’t just be going straight to the army, it will be distributed to companies throughout the UK that can fulfill the needs of the defence sector and win contracts.

In regards to R&D, there will be an increased demand for resistant tubing whether heat or fuel resistance, there will be a lot of testing that is being done to help develop the UK’s defence and these tests will increase the amount of material that is used.

Heat resistant tubing and sleeving will have an increased demand due to its already high requirements in the military and defence sectors and will be a key component in multiple vehicles, weapons and machinery used by a variety of military sectors. 

With the Government looking to increase the amount of jets and military vehicles there will be an increased demand for materials resistant to aviation and diesel fuels. Companies will look to secure these goods early to ensure that they have the right materials in place before funding is scaled fully.

Companies looking to secure goods early may look at call off services to give them the chance to procure the goods before actually having them shipped to keep the flow of goods monitored and prevent over stocking

Hilltop Products stock a wealth of products for military and defence sectors and specialise in the supply of high quality Insulation and Identification and Protection products to the Defence and Aerospace industries. We stock a wide range of Cable, Wire and Protection products from TE Connectivity who are the market leaders in the Defence and Aerospace sectors.




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