The UK government has announced that it will provide SMEs with more funding for defence-related exports.
The new funding, which follows the government’s announcement that it’s boosting defence spending to 2.5%, will “create a secure and stable environment in which businesses can thrive, supporting the government’s number one mission to deliver economic growth,” as well as meeting its objectives on national security, it says. It means up to 12,000 small businesses will receive additional financial support.
The government is also establishing a new hub to provide SMEs with “better access to the defence supply chain”, which will help “small, often family-owned, firms to bring their innovations, their agility and their expert workforce to the task of strengthening Britain’s defences”.
The hub aims to ensure the boost in spending goes directly to SMEs, helping them to train their workers and to raise finance, the government argues.
While 70% of spending in defence goes to businesses located beyond London and the South East, it adds, only 4% of that spending goes to SMEs, according to statistics from 2023–24.
The extra support for SMEs follows the prime minister’s announcement last week that he would boost UK defence spending to 2.5% of GDP by 2027.
This is to be funded by a reduction of 0.2% in the country’s aid budget.
British defence firms BAe Systems and Rolls Royce saw a big jump in their share price following the announcement whilst in Europe market anticipation for increased defence spending has seen stocks like Germany’s Rheinmetall and Italy’s Leonardo increase in value by 18% and 15% respectively.