How much does the defence industry contribute to UK regions?

In February 2025 the government announced increases in defence spending, pledging to spend 2.5% of the UK’s gross domestic product (GDP) on defence by 2027.

The government says it is putting the defence industry “at the heart” of its forthcoming industrial strategy. It has promised a specific defence industrial strategy, which it says will drive economic growth.

This Insight looks at how much the defence industry contributes to the UK economy, where in the UK the Ministry of Defence (MOD) spends its budget, as well as which regions have the highest defence-related employment. Data is not published on defence spending and employment at a constituency level.

Defining the defence industry

The defence industry includes firms in aerospace, shipbuilding and weapons manufacturing as well as electronics, communications and other emerging data-driven sectors. Government research in 2017 found that defence firms were common in a variety of sectors beyond traditional defence-related manufacturing, for example “IT consultancy”.

The defence industry is complex and difficult to define in economic statistics. There is no Standard Industrial Classification (SIC) Code or collection of codes that identifies defence firms well. SIC codes are the traditional system for classifying industries in official statistics and company databases. This is why the defence industry is not included in the Library’s constituency data dashboard on businesses and industries.

Additionally, many of the major defence manufacturers are companies that span several activities, not all of which are necessarily defence related. For example, Rolls Royce and Airbus manufacture both civilian and defence aerospace engines and aircraft. SIC codes do not separate civilian and defence applications.

Companies in the supply chain for the defence industry are even more difficult to identify. Many products and services supplied to the defence industry have dual-use (both civilian and military) applications.

Where are defence firms located?

Some organisations have compiled maps of defence industry sites.

The Aerospace Defence and Space Group (ADS), a trade body for the defence industry, publishes a high-level map of ADS defence sector member sites on page 9 of its Defence Sector Outlook report and lists of its members by region.

The Campaign Against Arms Trade (CAAT), which describes itself as a UK-based organisation working to end the international arms trade, has compiled information about companies operating in the arms trade. It produces a map and list of arms companies operating in the UK, first released in 2011, that can be searched by place or postcode.

Where does the government spend defence funding within the UK?

The Ministry of Defence (MOD) publishes regional statistics on its own defence expenditure with industry (how much it spends on contracts with defence firms). In 2023/24, MOD expenditure with industry amounted to £28.8 billion, equivalent to about of £420 per person living in the UK.

The South East of England had the highest amount of MOD spending with industry at £7.1 billion, and the South West had £6.9 billion. The next highest, the North West, had £3.8 billion. The South West had the highest spending per person (£1,190 per person), with all other UK regions below £750 per person. The chart below shows how much the MOD spent in each region of the UK in 2023/24.

Source: MOD regional expenditure statistics with industry: 2023/24 (21 November 2024, Table 4).

MOD defence expenditure with industry is only part of total defence spending in a region. Since it is based on MOD contracts with industry, it can vary from year to year depending on when large contracts are signed.

How many jobs does MOD spending support and where are they based?

The MOD estimated that its spending supported 434,000 full-time equivalent (FTE) jobs in the UK in 2022/23, which is about one in every 60 jobs (1.7%). This includes UK-based MOD civilian and Regular Armed Forces personnel, as well as jobs in industry supported directly and indirectly by MOD contracts.

134,000 jobs in industry were directly supported by MOD contracts in 2022/23, half of which were based in the South West and South East of England.

The South East and South West support similar numbers of jobs (around 33,500) but the South West has a higher proportion of jobs relative to the total number of jobs in the area (1,550 jobs in every 100,000). The chart and table below show direct MOD-supported jobs in industry by country and region.

The MOD estimated its contracts indirectly support 105,000 jobs in the supply chain, through sub-contractors and suppliers. Figures on jobs in the defence supply chain are not available by region.

Source: MOD supported employment estimates: 2022/23 (19 September 2024, Table 4).