‘Britain could soon lose control of its defence industry’ – expert Q&A.

Miltary spending is surging in the face of heightened geopolitical tensions. The UK plans to hike its defence spending to 2.5% of GDP by 2030, amounting to £87 billion a year.

This is an increase from around 2.3% today, which Prime Minister Rishi Sunak has said is necessary in an “increasingly dangerous” world.


This article is the opinion of the author (Keith Hartley, University of York) and not necessarily that of the UK Defence Journal. If you would like to submit your own article on this topic or any other, please see our submission guidelines.


It comes at the same time as the US has signed off on a US$95 billion (£76 billion) military aid package for Ukraine, Israel and Taiwan. Meanwhile, the once dovish Germans want to become Nato’s leaders in Europe, and nations like France and Sweden are also pushing for increased military commitments.

We asked Keith Hartley, a defence specialist and emeritus professor of economics at the University of York, to offer his views on how defence will change in the years to come.

What will spending increases mean overall?

You’re going to see a general increase in the demand for equipment. According to the Stockholm International Peace Research Institute (Sipri), world military spending grew 7% in real terms in 2023, rising for the ninth consecutive year. This looks very likely to continue, not least because it takes time to ramp up production.

Global military spend 2008-23

Chart of global military spend 2008-23
SIPRI

You can’t just turn on the tap and produce far more Eurofighters than you have been planning. Look at what happened in the run-up to the second world war. The UK built thousands of Hurricanes, Spitfires, Lancasters and Halifaxes, but it meant increased labour, new factories and shadow factories (meaning units converted from other kinds of production). This programme dated back to the mid-1930s.

What kinds of change are we going to see?

An important change relates to the equipment that militaries will use in future. On the one hand, we’re seeing the development of what are sometimes called Augustine weapons systems, referring to new generations of equipment that are more complex and hi-tech than existing ones.

These are named after Norman Augustine, the former CEO of Lockheed Martin, who wrote a book forecasting that costs would rise so much as military technology grew more complex that countries would eventually only be able to afford a single warship, a single tank and a single aircraft. This trend has been happening for some time. For example, it used to be the case that Britain’s Royal Air Force bought 1,000 Hunter aircraft; now it’s relying on fewer than 150 Eurofighter Typhoons.

At the same time, you’ve got the development of very cheap but quite capable drones. For example, you can have a drone that goes out to sea and does aerial reconnaissance surveillance, staying there for hours without a manned crew. And while we think of drones as machines in the air, that’s going to change too. We’re going to see unmanned submarines, for instance, as well as drones in space.

So, one big question is to what extent we’ll rely on Augustine systems, and to what extent drones. Rather than highly expensive Eurofighters, we might have to make do with drones much more in future.

How would this affect the defence industry?

We’re moving to a situation where companies won’t be able to sell enough Augustine systems, so they’ll increasingly be looking towards international mergers to make the business viable.

At the moment, Europe is developing two different advanced combat aircraft to replace Eurofighter Typhoons. France, Germany and Spain are developing one known as the Future Combat Air System (FCAS), while Britain, Japan and Italy are producing a rival called the Tempest.

It’s going to be very costly for those nations to produce these similar combat aircraft, and countries won’t be able to afford them in large numbers. Typhoons cost about £100 million per aircraft, but the Tempest could cost five times that. So there’s every incentive for these buying countries to combine their orders, by merging their principal defence companies, to get a decent production run and share production costs.

It’s therefore likely we’ll continue the trend of a smaller number of bigger defence firms. For instance, Britain’s aerospace industry is dominated by BAE Systems and Rolls-Royce. I increasingly see those firms merging with, say, Airbus, or moving in an American direction and merging with a Boeing or a Lockheed. This means that you will increasingly see foreign firms playing a larger role in national defence, both in the UK and elsewhere.

Would national governments tolerate that?

It will certainly be interesting. In the early 2010s, BAE was going to merge with Airbus owner EADS (the European Aeronautic Defence and Space Company), but the German government opposed it.

Clearly, governments would have a worry about foreign takeovers in future – but they haven’t got much choice, frankly. The French seem to believe thou shalt not buy weapons from foreign companies, but they have got a limited budget. Similarly, Sweden used to pride itself on having an independent defence industry, but can’t afford it now.

With BAE or Rolls-Royce, I’d hesitate about them being the senior partner in a merger if it’s a US deal. The US would want to lead – and they’ve got the market to be the leader. I’m not sure how you get around that.

Similarly, I think we’ll see more cooperation between national militaries. France’s president, Emmanuel Macron, has been talking recently about a more integrated European military, which makes sense because national markets in Europe and indeed Britain are so small. But I do despair of Europe ever getting its act together.

Where is UK defence spending heading?

Both the main UK parties seem committed to 2.5% defence spending as a proportion of GDP. If that’s the commitment but the cost of Augustine systems is going through the roof, you’ll be paying more for less. It’s similar to the situation in the NHS.

But I do think it will happen, particularly if there’s pressure from people like Donald Trump (who wants Europe to contribute more to Nato’s defence costs). But it’s going to be at the expense of civil goods and services. It’s a classic case of guns v butter, Tridents v the health service.The Conversation

Keith Hartley, Emeritus Professor of Economics, University of York. This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Chris
Chris (@guest_815359)
1 month ago

Tempest is a nonsensical dream. Billions in development and now 500m per copy for a giant multi engine strike fighter that probably won’t receive any funding for updates during its design life? The UK likes to criticize the F-35 program, but it’s about to find out just how difficult and expensive a 5th/6th gen program is.

The UK should join the Swedish program for the gripen replacement and buy smaller, more numerous (cheaper) aircraft. If you need a strike aircraft buy a dozen B-21 and be done with it.

Leh
Leh (@guest_815392)
1 month ago
Reply to  Chris

500 million? You’re out of your mind. Tempest is the one programme keeping the UK fighter jet industry alive right now, with EF winding down. Also, we’re not going it alone, we have Italy and Japan (whose recent military uptick means it will likely be the partner with the deepest pockets).

To your point about the B-21, it seems unlikely that the US will sell, much like the F-22. So, if you want the UK to have stealth bomber strike capability, we’d have to make our own. That would be even more expensive.

Adrian
Adrian (@guest_815576)
1 month ago
Reply to  Leh

They US quite possibly would sell sell the B-21 to the UK (I believe the UK at one point had the opportunity to buy the F22) but 1. The UK couldn’t afford it and 2. The UK couldn’t afford the weapon stockpile to equip a B-21, we probably don’t even have a large enough stockpile to equip all our aircraft at once and certainly not enough to equip all 7 Astutes with cruise missiles for example. Back to the point though, BAE systems are probably large enough to cope, given the other subsidiaries around the world and Rolls Royce maybe… Read more »

Leh
Leh (@guest_815580)
1 month ago
Reply to  Adrian

I don’t think that idea that the F-22 was ever seriously available to the RAF is plausible. The UK was pushing on with the Typhoon programme, so an air to air fighter was already being procured. The MoD penny pinchers would have had a heart attack at the idea of a split fleet. Furthermore, the UK was already invested in the JSF, so ultimately, the F-22 was useless to them.

On your point about not being able to equip them, I 100% agree.

Adrian
Adrian (@guest_815582)
1 month ago
Reply to  Leh

Agreed that the F-22 wasn’t a practical option that would have ever been pursued by the UK but I think at that time if the UK had have wanted it, it was probably the only country that could have had it

Spyinthesky
Spyinthesky (@guest_815664)
1 month ago
Reply to  Adrian

Very possibly at some point, after all since those days both Israel and Japan got some way in negotiations to acquire them, it just became after deliberations deemed more expensive to reopen production lines than produce a new aircraft in one instance and reluctance to reduce the limited available numbers to the USAF in the other.

Chris
Chris (@guest_815613)
1 month ago
Reply to  Adrian

The US has already offered the B-21 to Australia “If they desire it”

Spyinthesky
Spyinthesky (@guest_815661)
1 month ago
Reply to  Adrian

Yeah two points buying as you say B-21s is not going to happen the whole cost would be unthinkable considering as you say all the support and weapon add ons, and it’s also a near one trick pony and if its ability to do that is seriously compromised for Britain it would be a total disaster akin to our nuclear submarines being traceable wherever they go. The only reason Tempest is possible is the costs are being shared and the importance to British jobs, interests and expertise and keeping Bae and others no doubt committed to the UK, which as… Read more »

Monkey spanker
Monkey spanker (@guest_815632)
1 month ago
Reply to  Chris

I completely disagree. Even if tempest cost £500m a larger chunk of that will make its way back to the treasury with lots more being recycled through the economy over and over. The spares and maintenance costs produce similar results economically. Purchasing something foreign that’s even less than half the price will not be cheaper over the life of the program. Then the issue comes when your second, third, tenth on the priority list for spares, weapon integration etc etc. Some items have to be made in the U.K. like front line aircraft, drones, submarines, ships, ammo etc. while some… Read more »

Spyinthesky
Spyinthesky (@guest_815665)
1 month ago
Reply to  Monkey spanker

Absolutely and the cost of likely losing your chief indigenous defence supplier (possibly your second too and the two largest manufacturers) and all the implications of that on jobs and expertise you will never get back, does not bear thinking about. It’s not simply the cost of two aircraft per airframe after all. Equally the fact the Raider is limited in what it can do you would still need to purchase another aircraft for air superiority and mainstream attack be it a foreign competitor or more F-35s of the A version and accept you use it as your prime Air… Read more »

Spyinthesky
Spyinthesky (@guest_815660)
1 month ago
Reply to  Chris

I am not even going to argue with this it falls down on any logic from the cirs5 sentence and I suspect nearly everyone here will recognise that. As for the content in the article, Bae and DASA were going to merge circa 1998 but the distraction of Bae wanting to buy GEC defence systems which itself had been trying to buy Bae for years scuppered that and thus Airbus and EADs took their final form with Bae selling its civil interests to Airbus. Bae will not merge with Airbus EADs now but as I have long argued if its… Read more »

FormerUSAF
FormerUSAF (@guest_815714)
1 month ago
Reply to  Chris

Probably premature for any SWAG re GCAP cost estimate, other than the published NGAD estimate of $300M/copy +/- X%. The Japanese could possibly inject sufficient manufacturing discipline to restrain cost growth, but certainly not a guarantee. If the Brits succeed in increasing defence expenditures to 2.5% of GDP, there may be sufficient budgetary headroom to purchase a relatively small fleet, eventually. Certainly agree that the purchase of a squadron of B-21 a/c would be a worthwhile investment for UK. Diversity in weapon delivery systems would complicate the target planning function of the Orcs and even ChiComs, provided there was a… Read more »

FormerUSAF
FormerUSAF (@guest_815715)
1 month ago
Reply to  FormerUSAF

… variation…🙄

James Fennell
James Fennell (@guest_815364)
1 month ago

Airbus is wiping the floor with Boeing, RR has driven P&W out of the market and BAe built a major US business. Yes we need to drive harder, but this seems obtuse.

Jim
Jim (@guest_815382)
1 month ago
Reply to  James Fennell

Yes BAE is one of the largest US defence contractors and RR is increasingly the world leader in jet engines.

Both have a golden share owned by the British government and can’t be taken over.

Airbus merger with BAE was basically Airbus moving to the UK and the UK government would have retained its golden share.

No way the government would now allow such a merger.

If the UK focuses on anything it should be getting leading British companies back from European control, Leonardo Radars and EW in Edinburgh and Thales Sonar systems.

DanielMorgan
DanielMorgan (@guest_815454)
1 month ago
Reply to  Jim

The world leader in jet engines is GE. P&W (Raytheon) is second and RR is third.

Jim
Jim (@guest_815479)
1 month ago
Reply to  DanielMorgan

I was referring more to technology than volume especially with ultra fan. RR seems to have worked out most of the kinks in its new engine program while GE and PW are still suffering.

RR even win a USAF contract which should be impossible for a foreign company.

Chris
Chris (@guest_815614)
1 month ago
Reply to  Jim

The Trent 7000 is a mess, to the point it is hurting airbus sales. GE is top dog, P&W is also a mess.

Branaboy
Branaboy (@guest_815617)
1 month ago
Reply to  Chris

That is not true. The RR T7000 engine on the A330neo (only engine option) is fine. The engine that has been a mess is the T1000/TEN that is offered on the B787 Dreamliner. The problems on that engine have been fixed at great expense by RR. The current RR commercial engine lineup, like all the current modern high bypass ratio engines from it competitors PW (GTF) and GE (LEAP, GEnx, GE9X), suffer from durability issues (time on wing). The aviation media, which is predominately American, more often than not harps on the troubles of RR, the only real competitor to… Read more »

Chris
Chris (@guest_815619)
1 month ago
Reply to  Branaboy

Air Belgium literally gave the A330neo’s back to airbus because of the T7000 engine problems. It has severe crosswind limitations (10 knots) due to asymmetrical air flow causing compressor stalls.

Spyinthesky
Spyinthesky (@guest_815697)
1 month ago
Reply to  Chris

Right let’s get some perspective here. Air Belgium were in financial trouble for years before delivery of those 2 aircraft. Yes one had a hydraulic fault on a flight and returned to Belgium where ‘metal objects’ were discovered in one engine. Airbus refused to take any responsibility for it and the quote from RR is as follows ‘“As far as we are aware this is not an engine issue. The Trent 7000 engines on these aircraft have performed well and have delivered industry-leading levels of reliability and availability during the time they have been operated by the airline. Air Belgium… Read more »

Andy reeves
Andy reeves (@guest_817618)
1 month ago
Reply to  Chris

where do you get this stuff?

Spyinthesky
Spyinthesky (@guest_815677)
1 month ago
Reply to  Chris

Well that sounds like old news tbh, it was delayed for a while by durability problems with the Trent 1000 on which it was based which delayed the 7000 development as a knock on for a while, but it has achieved 99.9% dispatch reliability years ago and only affected early airline orders during 2017 to 2019 period until output caught up. So hopefully the early delays, not unusual after all with new engine technology, have been sorted, certainly haven’t read of anything since certainly nothing to the effect it’s a mess.

Spyinthesky
Spyinthesky (@guest_815671)
1 month ago
Reply to  DanielMorgan

True overall but in some important segments I was reading RR have a very big chunk and certainly only second to GE in some and certainly competitively looking stronger presently that P&W though I can’t remember the exact details presently so can’t add any more unfortunately.

Spyinthesky
Spyinthesky (@guest_815667)
1 month ago
Reply to  Jim

I’m still pissed off with what we did with Racal a massive missed opportunity in an award winning business that was reaching a size where double digit growth was no longer practical but miffed the City as a result. Too often the fact in British business as indeed was expressed by creator Herman Hauser when arm was sold into foreign ownership and a few months back by the originator of DeepMind when he said he preferred to start new businesses in California because Britain and the City are far to conservative and risk averse. Bit of a problem when such… Read more »

Supportive Bloke
Supportive Bloke (@guest_816613)
1 month ago
Reply to  Spyinthesky

There just isn’t the capital available in London to fund things.

Really you have to thank Gordon Brown for destroying the pensions industry for that and then overregulation on top of it.

Unfortunately the final salary schemes pumped the London stock market for years – that was when British invested in British……

Andy reeves
Andy reeves (@guest_817616)
1 month ago
Reply to  Jim

👍👍

AlexS
AlexS (@guest_815385)
1 month ago
Reply to  James Fennell

PW GTF engine is now selling well.GE and CFM(GE +Safran) is also big. I am not optimist about RR since it has only engines for big aircraft.

Last edited 1 month ago by AlexS
Sonik
Sonik (@guest_815394)
1 month ago
Reply to  AlexS

Turbofan manufacturers make their money on maintenance and rebuild (not new sales) and RR have a very healthy installed base, basically exclusive on AB wide bodies.

Also bigger engines have shorter maintenance cycles, and no one does triple spool outside RR. Whereas the likes of CFM’s have to compete with independent MROs.

So RR are not in great shape but they are not in deep trouble either.

Math
Math (@guest_815489)
1 month ago
Reply to  Sonik

Just to say, I don’t know everything regarding Safran, but I can just say that they are hiring a lot of my countries blue collar and white collar alike. All production lines are increasing capacity in engine departments.

James Fennell
James Fennell (@guest_815399)
1 month ago
Reply to  AlexS

They are more than a one trick pony. RR is still a major supplier to IAE although they sold their stake in V2500 to UTC (P&W), it powers the A219/20/21 as well as Embraer civil and military jet products (and outsells SAFRAN/GE CFM powered 737s). RR make the BR700 family of small fans too, which power Bombadier’s small jets and also the Gulfstreams and are re-engining B-52s. They also make plenty of turboprops/shafts for the likes of C-130, V-22, A400, Wildcat, A129, Saab 2000, C-27, as well as their Adour, EJ200 and F-35 Liftfans for military jets – and developing… Read more »

Last edited 1 month ago by James Fennell
Spyinthesky
Spyinthesky (@guest_815682)
1 month ago
Reply to  AlexS

Not true though is it it has a whole range of German produced smaller engines popular on Business jets and the Pearl engines being developed from the that BR series and Allison engines too of course come into the equation.

Spyinthesky
Spyinthesky (@guest_815698)
1 month ago
Reply to  AlexS

BR series, Pearl, Allison engines tend to refute that assumption.

Patrick C
Patrick C (@guest_815588)
1 month ago
Reply to  James Fennell

how is airbus ‘wiping the flood with boeing’? boeing is outselling and outdelivering airbus in widebody sales which is where the money is. complete nonsense about P&W

Tullzter
Tullzter (@guest_815639)
1 month ago
Reply to  Patrick C

it’s not…Airbus widened order and delivery edge over Boeing in 2023source: flightglobal

Defence thoughts
Defence thoughts (@guest_815384)
1 month ago

If gene therapy allows us to build a cheaper NHS, then there may be more money for platforms.

Remember that the RN didn’t have that many ironclads in the 19th century, and they had the largest navy in the world- it took the development of the Royal Sovereign and Majestic predreadnoughts for mass-produced metal ships to really get going. I suspect we might manage to get around the problems we face, but it will require alot of thinking and shuffling of resources to do so.

Spyinthesky
Spyinthesky (@guest_815694)
1 month ago

Well we did have the most powerful iron warship in the World in the mid 19th Century ie Warrior which made all others obsolete over night and which many claim to be the first true Iron warship. Problem is that as when Dreadnought arrived everything became obsolete within a decade so overt number games were probably not the best answer at that time. The Majestics were obsolete very quickly and ships launched in 1912 were being sent to the scrapyard by 1920, that damned peace dividend probably had a role back then too mind.

Boris Cross
Boris Cross (@guest_815418)
1 month ago

As far as I can see we have already lost control of most of our defence (and other) industries. I used to work in the defence and aerospace industry. I have suggested to my MP on a number of occasions that letting it all go is a disaster but it’s probably a bit late now.

criss whicker
criss whicker (@guest_815426)
1 month ago

why do so called experts always run us down. as useless inadequate or unable to build anything nowadays. as you know, I’m no expert. but why is it other countries a lot poorer that us can do apparently what we cannot afford.
surely if others can produce equipment , then surely so can we, the British haters always seem, to quick to sell us to the Americans or the unmighty EU.

just saying like, some nice loyal posts on here, keep it up…

Quentin D63
Quentin D63 (@guest_815457)
1 month ago
Reply to  criss whicker

Hi Chris, Britain is still alive and building some good stuff right now. I’m no expert on anything either and things are not always 100% British as we’re part of a multinational and integrated supply chain world. The Carriers, T26, Dragonfire, and Ancilia and CAMM are good current examples of 🇬🇧 design and build. I think you can let some of the nay sayers opinions get blown away by the wind. I just saw some pics the other day of the electric MG coupe, looks bloody fantastic and very 🇬🇧 to me but I’m not sure where it’s built? It… Read more »

ChariotRider
ChariotRider (@guest_815488)
1 month ago
Reply to  Quentin D63

Sadly, the MG mark was bought by a Chinese company back in the 90’s, I think. Clever move by them, but today’s MG is nothing to do with the UK or the historic British company. Sadly.

Cheers CR

william james crawford
william james crawford (@guest_815505)
1 month ago
Reply to  ChariotRider

Well MG’s design office is still in the Midlands even if they are owned by and built in China!

tomuk
tomuk (@guest_815873)
1 month ago

I don’t believe much if any of it still is. After GM let SAIC have full access to its technology, the ex MG Rover lineage was dropped.

Quentin D63
Quentin D63 (@guest_815469)
1 month ago
Reply to  criss whicker

My first reply has disappeared somewhere. It’s not all bad Criss, T26, CAMM, Dragonfire, Ancilia, the QE Carriers. Pretty current and 🇬🇧!

Last edited 1 month ago by Quentin D63
Meiyo
Meiyo (@guest_815480)
1 month ago
Reply to  criss whicker

Because what the British (or Europeans) produce costs a lot more than these poorer countries (And the quality gap is smaller year after year).
This explains why Russia can still have a military complex bigger than the whole of Europe (while having a lot of problems, I agree).

Stop looking only at GDP.

Last edited 1 month ago by Meiyo
Math
Math (@guest_815493)
1 month ago
Reply to  Meiyo

You’re right. Though when we look at FMAN FMC, meteor, Aster, challenger 3, Boxer… When you look at asterix space war exercises, and so many more successful programs in which UK is participating, sometimes leader, sometimes follower, I strongly believe that coopération in weapons manufacturing in Europe is the way to go. We’ll succeed most likely to make the MGCS and Scaf with Germany, cooperation is working. Of course France itself or UK alone are not always leaders, but the achievements are already to be considered: the front line is a bit further, more and more people wants to cooperate… Read more »

Pleiades
Pleiades (@guest_815609)
1 month ago
Reply to  criss whicker

Because they’re experts and as you admitted, you’re not. Juvenile fantasies about British exceptionalism doesn’t impress the real world.

Spyinthesky
Spyinthesky (@guest_815690)
1 month ago
Reply to  Pleiades

Well while we are at it can we put some realistic focus on the endless devotion to mythical German industrial excellence while so effortlessly putting down everything that Britain does. We are highly competitive indeed world leaders in some exquisite engineering categories including F1 or indeed the most prestigious civil engineering company in the World for a reason and too often it needs foreigners to tell us this because we have such a downbeat cynical attitude to this Country’s achievements. Objectivity is great, self flagellation certainly is not.

FOSTERSMAN
FOSTERSMAN (@guest_815461)
1 month ago

Then BAE and RR should merge and then price themselves out of a potential foreign takeover if that’s the major concern.

Imagine the potential of a single company being able to design and build an aircraft from the airframe, engine etc. the potential cost savings would be advantageous.

Jim
Jim (@guest_815497)
1 month ago
Reply to  FOSTERSMAN

It’s not a concern no one can take them over due to government golden shares.

Jon
Jon (@guest_815511)
1 month ago
Reply to  Jim

No UK Defence company or provider of a strategic resource can be taken over by a foreign country without the UK government’s approval. That doesn’t mean the UK goverment doesn’t acquiesse all the time. Golden shares are meaningless if their owners don’t give a stuff. Newport chip fabication, the old INMOS factory and the UK’s largest chip manufacturer, was going to be taken over by a Chinese owned company and the government stopped it because of its strategic value, only to allow it to be sold to an American company, Vishay, three years later instead. And it’s not like Vishay… Read more »

Last edited 1 month ago by Jon
Andy reeves
Andy reeves (@guest_817621)
1 month ago
Reply to  Jim

wd should have a coup and take over the MOD procurement.

Simon
Simon (@guest_815610)
1 month ago
Reply to  FOSTERSMAN

The trouble is that doesn’t make you immune from a take over. You only need an activist share holder to start wanting to “unlock value” and there a problem or share value to fall and you could be subject to a takeover

Joe16
Joe16 (@guest_815463)
1 month ago

I think one significant weakness of the UK defence industry is that our innovators -the small companies that come up with new ideas, different ways of doing things, often cheaper ways of doing things, get snapped up by foreign investors and the IP goes out of the country. We should be seeing these as strategically important in the same way we do BAE and RR and keeping them British.

Expat
Expat (@guest_815508)
1 month ago
Reply to  Joe16

Thats not a weakness of the defence industry its an overall problem that the government (and oppsoition) doesn’t support investment. UK is increasingly a hostile place to invest. If you say the word profit now your sneered at by some as if you stole that money for someone. My pension, I can select where I want to invest, I used to invest in UK small caps, but its not a place I want to put my pension money now.

Joe16
Joe16 (@guest_815537)
1 month ago
Reply to  Expat

You’re preaching to the choir, I’m working in a company that has worked for nearly 5 years to secure sufficient investment to develop and build a capability that has had a recognised need and market for that entire time. Risk averse doesn’t begin to describe the environment in the UK when it comes to investment.

Supportive Bloke
Supportive Bloke (@guest_816615)
1 month ago
Reply to  Joe16

I totally agree – I have a startup that is facing the same thing.

Q ‘So what do you think of our business?’

A ‘Great idea;
Wonderful margins;
Huge market;
Bound to succeed.’

Q ‘Are you going to invest?’

A ‘No – we are not in that space’ [translation we don’t actually have any money to invest – unless we are sheep pilling into online supermarkets]

OK, the last bit is two years out of date but they were all putting money into something that could never, by back of an envelope calls, ever make any money.

Joe16
Joe16 (@guest_816749)
1 month ago

That sounds incredibly familiar!
They would rather enter into a known entity crowded market with poor to marginal returns than try anything that someone else hasn’t already taken a punt on. Except that we’re fast running out on those initial punters, or having to rely on foreign ones.
It’s a dangerous place to be, and a bit shameful for a nation that drove the industrial revolution. Not sure when we became quite so financially timid…

Spyinthesky
Spyinthesky (@guest_815692)
1 month ago
Reply to  Expat

Exactly the City and investors first question to new start ups in this Country is invariably about when they expect their business can be successful enough to sell, invariably to foreign companies. The Govt even presents it as ‘inward investment’ and faith in the British economy. When the creators of arm and DeepMind lament on such factors we truly should listen… but they n reality Britain is now all about making a quick buck and investing in property, here or abroad or if it goes into new businesses invests in foreign new start ups where support and long termism is… Read more »

Cripes
Cripes (@guest_815476)
1 month ago

We are not spending anything like the author’s 2.3% of GDP on defence – that’s HMG’s inflated figure adding in the aid to Ukraine. The UK’s GDP for 23/24 was £2.74 trillion, of which £54.2 bn was spent on defence. I make that defence spend 1.97% of GDP. It of course includes.pensions and nuclear and chunks of the intelligence budget which Osborne shovelled into the defence budget in 2015. If we deduct these dodgy elements, we are in reality spending about 1.5% and simply lying about it. The defence spend is not going to increase to £87bn a year as… Read more »

Jim
Jim (@guest_815499)
1 month ago
Reply to  Cripes

But you’re assuming Ukraine aid wil still be getting paid at the end of the decade. Once the Ukraine funding stops the 2.5% commitment will remain which will translate into more funding.

Just as with the 0.5% then 0.7% spending on foreign aid it will be very difficult for any future government to just ignore it or revert back to 2%.

Cripes
Cripes (@guest_815519)
1 month ago
Reply to  Jim

I’m not assuming anything about Ukraine spending. It should and would normally be treated as an Urgent Operational Requirement and paid from Treasury reserves. Of course it has not been, all these increased funds for defence that the government keeps announcing have not made it into the defence budget,. The money has gone to Ukraine in cash or kind. So defence is still sitting on 1.97% of GDP and no doubt will continue to sit there until such time as the Ukraine war comes to a halt. You seem to be assuming that, at that point, defence will finally get… Read more »

Expat
Expat (@guest_815509)
1 month ago
Reply to  Cripes

Totally agree, My vote for Corbyn would have seen defence spending off the chart. The reality is the bar on spending is set during the election campaign, Labour would preferred to focus on chlorinated chicken than defence. Quite why anyone aligns themsleves with the Tories or Labour is beyond me.

Cripes
Cripes (@guest_815530)
1 month ago
Reply to  Expat

The Lib Dems surprised me by announcing at their party conference last October that they would overturn the cuts to army manpower and restore it to its previous strength of 82,000. Knock me over with a feather!

They won’t be forming a government but still good that the need to increase defence capability has got some solid traction in Parliament.

Jon
Jon (@guest_815573)
1 month ago
Reply to  Cripes

I will read their manifesto with some interest.

pete
pete (@guest_815601)
1 month ago
Reply to  Cripes

The Lib Dems also said they would take over the water industry, have they a magic money tree ?

Supportive Bloke
Supportive Bloke (@guest_816617)
1 month ago
Reply to  pete

Just a deep hole to push money into…….

Jon
Jon (@guest_815513)
1 month ago
Reply to  Cripes

It’s unfair to suggest the current government haven’t decided anything meaningful on UK defence spending. They decided not to increase spending this year and to continue the cuts to Army manpower. Both very meaningful to the services and our conventional deterrence posture.

Monkey spanker
Monkey spanker (@guest_815644)
1 month ago
Reply to  Cripes

You sir are totally correct. The government constantly lie about defence. If the budget was as big as they say it is why is everything getting cut.
I said previously I estimated defence spending to be around 1.5%. For a nuclear power trying to act at the top tier it’s a disgrace.
The conservative government have slashed defence in the U.K. and instead of being honest they constantly lie and fiddle budgets.
I would have more respect if they just told the truth

Lonpfrb
Lonpfrb (@guest_816317)
1 month ago
Reply to  Cripes

NATO says that the 2010 spending agreement is on track, which they don’t have to do if it wasn’t true. So 2% GDP is the floor not ceiling spending and UK has achieved 2.1% by the HM Treasury trick of counting the CAS strategic deterrent with the MoD spending. The reality being much less than 2% at MoD. Typical weasel words from the out going politicians “target 2.5% by 2030, as economic conditions allow”. The Peace Dividend delusion has allowed politicians to safeguard their electoral prospects by shifting Defence spending to social provision and even war in Europe hasn’t enabled… Read more »

John
John (@guest_815538)
1 month ago

Whilst we “depend” on the US? It will always be so. The American MIC has for too long held the power to restrict development of its products sold. That is a monopoly, not good business practice. The F35 is an example of this farce. And yet again, “mass” is proving more important than tech. Tech is no good if it runs out in two weeks. Mass on the other hand will always win a conflict in the end.

Cripes
Cripes (@guest_815590)
1 month ago
Reply to  John

I so agree John. Our one war-fighting division is well under strength, having only two manoeuvre brigades, which is a pretty dismal state of affairs that reflects badly on the UK’s standing with our allies. The much-depleted RAF is in the same boat, with nothing like the mass needed to make much impact in a peer war. Yes, 3 Arm Inf Div does need.some new and additional kit, the latter including more combat and utility helicopters, a larger pool of tanks, an organic anti-tank regt and probably an assault pioneer one as well, and so on. But the main need… Read more »

Math
Math (@guest_815647)
1 month ago
Reply to  Cripes

Well, we have the same issues in my country. War is looked upon from an industrial standpoint and from a technology standpoint, but not so Faten for what it is. The air, sea and land mass are lacking. It seems the defined purpose of the army does not really exists. Fight in the east: it is faraway. Fight for the Islands: perhaps. Fight for securing trade routes, yes and no. This is not a top priority. So… no mass, but we can sell weapons to whoever can afford them.

John
John (@guest_815663)
1 month ago
Reply to  Cripes

I agree totally. Of course leave decisions in the hands of politicians? Disasters ensue.

Peter S
Peter S (@guest_815608)
1 month ago

Consolidation in the defence sector has been going on for decades. Generally big companies acquire smaller ones. So the sheer scale of US defence production means US acquisition of foreign defence companies is likely, unless governments( with a deeper sense of national interest than ours) prevent it. More worrying than ultimate ownership of companies is the loss of design and manufacturing capability. We can’t design and build new small arms, new naval guns will all be foreign designed and foreign built, future artillery guns will be German made. Where other countries in Europe have kept capabilities by state ownership or… Read more »

Math
Math (@guest_815650)
1 month ago
Reply to  Peter S

So true. And this comes down to engineering skills, senior project management, credibility from the provider and the decision maker, so again and again, engineering and technicians knowing and caring about what they do, instead of just Excel sheet providers, who have for some time replaced reflection in many decision making centers. Finance and low technical knowledge have had an heavy cost on all aspects industries in previous years which were mostly centered on trade. Engineering culture must go back to senior position in administrations, so that Ajax, F35 or Louvoie (for France) kind of systems do not happen so… Read more »

Monkey spanker
Monkey spanker (@guest_815631)
1 month ago

I can’t see governments giving up their national defence companies. While smaller companies have gone the main ones are unlikely to be allowed to merge without a massive list of conditions.
What can’t be forgotten is the large number of people these companies employ, the large amount of money that goes back to the government for every pound spent in a national company cannot be forgotten.
The skills and duel use of technology that feeds into other industries.
While tempest may be expensive it’s still cheaper than purchasing some aircraft from another country.

Dern
Dern (@guest_815705)
1 month ago

“Drones in Space.”

I think we’ve had those for a long time, and we’ve called them Satellites.

Lonpfrb
Lonpfrb (@guest_816319)
1 month ago
Reply to  Dern

Amazingly the 1970’s Voyager probe still continues to report despite being outside the Solar system so good engineering does matter…

Zac
Zac (@guest_815721)
1 month ago

The Swedes seem to manage just fine.

Lonpfrb
Lonpfrb (@guest_816318)
1 month ago
Reply to  Zac

So selling Volvo to CCP doesn’t matter….

Graham Moore
Graham Moore (@guest_816277)
1 month ago

Keith Hartley says: “Similarly, I think we’ll see more cooperation between national militaries. France’s president, Emmanuel Macron, has been talking recently about a more integrated European military, which makes sense because national markets in Europe and indeed Britain are so small. But I do despair of Europe ever getting its act together”. I am not sure what he means by seeing more co-operation between national militaries (rather than Industries) and then contradictingly despairing of Europe getting its act together. I do not despair of the several strands of cooperation between European militaries. The EU conducts military operations and has done for many… Read more »

Mark B
Mark B (@guest_816455)
1 month ago

What nonsense. The defence industry is an extension of the Government. This will only happen if we lose control of the Government – which is more likely.

Tams
Tams (@guest_816471)
1 month ago

As annoying as BaE and Rolls-Royce can be, especially as they often have a stranglehold on indigenous options…

If any British government allows them to be bought up by a foreign entity, then those responsible should be strung up and the companies forceably taken into British ownership again.

Steve
Steve (@guest_816702)
1 month ago

I like the optimism that this will happen, when the date has been set not after the current election but the one after that, where all policticans involved will be long gone and there was no detail behind where the money will come from. Ironically still less than the amount under the last government.

Andy reeves
Andy reeves (@guest_817615)
1 month ago

it’s the ones using the industry that needs controlling

Frank62
Frank62 (@guest_823221)
19 days ago

2.5% may increase forces suficiently for peacetime from the totally inadequate present. It will not prepare us for looming war.

Lord Baddlesmere
Lord Baddlesmere (@guest_825654)
9 days ago

Arguably Britain has already lost control of its defence industry. A vehicles are made By US and German companies with no UK R&D or IPR. Ditto Soft skinned vehicles and trucks. Rifles and weapons are being sourced offshore. Energetics are bought offshore. We are stopping steel manufacture in volume. Comms, sonar and avionics has been sold off to German, Italian, French companies. Large aircraft are sourced from Airbus or US. Helicopters US, The last company sell offs FR, Ultra etc were reviewed by none other than Kwasi Kwarteng who did zero to protect UK interests. Artillery manufacture has been destroyed… Read more »