The Confederation of British Industry (CBI), in partnership with Oliver Wyman, has today (Tuesday 8 July) published a landmark set of recommendations from its Defence & Economic Growth Taskforce, outlining practical steps for how the UK government and industry can work in partnership to seize an opportunity to align defence investment with the national economic growth mission.
In a period of global uncertainty, the security of our nation is of primary importance. And with the UK committing to increasing spending as a proportion of GDP, the government and industry must act now to unlock the widest possible economic impact.
Today’s report from the Defence and Economic Growth Taskforce outlines a bold vision for mobilising capital, talent, and innovation across government, industry, academia, and finance to achieve this ambition.
The Defence and Economic Growth Taskforce – headed up by Rain Newton-Smith, CEO and Lisa Quest, Managing Partner UK & Ireland, Oliver Wyman – and co-chaired by the Chancellor and Defence Secretary, was tasked with identifying how to mobilise and attract capital flows to maximise economic growth and productivity. With that explicit remit, it was designed to be additive to other government initiatives including the new cross Whitehall Defence Growth Board and the Defence Industrial Joint Council (DIJC)
Bringing together CEOs from across the defence and finance ecosystem, with secretariat support from ADS and PA Consulting, alongside wider industry and government input, the Taskforce has developed a set of recommendations that complement wider government policy including the Strategic Defence Review and the Industrial Strategy.
The report identified two cross-cutting foundational recommendations and four target outcomes.
Foundational recommendations:
- Strengthen the demand signal to the market: The Strategic Defence Review needs to be put into action by creating a 10-year Defence Investment Plan. This plan should clearly show what the government plans to buy and invest in, when it plans to make those purchases, and how much it plans to spend. This would give a strong and clear signal to industry, so contracts can be made quickly, while still allowing flexibility to adjust to changing defence needs.
- Reset and reinvigorate the national public dialogue to define and embed a cross sector ‘Team UK’ mindset and approach. A renewed national conversation is needed which must be led by government, industry, and academia to redefine the importance of defence as a driver of economic growth. To ensure spending directly supports domestic economic growth, an important principle of ‘Team UK’ should be to buy from companies generating value in the UK. Such a shift is vital to attract both capital and talent into the sector.
Target outcomes:
- Deploying defence spending as an economic force multiplier, with reforms to procurement and contracting.
- Improving the global competitiveness of UK defence firms through export support and international partnerships.
- Mobilising private sector investment, including pension funds and asset managers, to unlock new financing models.
- Attract finance to shape a UK defence supply chain that is resilient and aligned with government priorities.
These recommendations build on recent policy announcements including the Strategic Defence Review, Spending Review, and NATO Summit outcomes, and are designed to inform the forthcoming Defence Industrial Strategy.
The Taskforce is made up of the following:
- Aimie Stone, Chief Economist, ADS Group
- Kata Escott, UK Managing Director and Head of Country, Airbus Defence and Space
- Marc Wietfeld, CEO & Co-Founder, ARX Robotics
- David Lockwood, CEO, Babcock International
- Charles Woodburn, Group CEO, BAE Systems
- Matt Hammerstein, CEO, Barclays UK Corporate Bank
- Dom Cartwright, CEO, Beaufort
- Raoul Hughes, CEO, Bridgepoint Group
- Rain Newton-Smith, CEO, Confederation of British Industry
- Ned Baker, UK Managing Director, Helsing
- Ian Stuart, CEO, HSBC UK Bank plc
- Kerry Baldwin, Managing Partner & Co-Founder, IQ Capital
- Rob Hales, Managing Director of James Fisher Defence, JFD Global
- Charlie Nunn, Group CEO, Lloyds Banking Group
- Andrea Rossi, Group CEO, M&G plc
- Paul Thwaite, Group CEO, NatWest Group
- Lisa Quest, Managing Partner UK & Ireland, Oliver Wyman
- Pete Lovell, Global Head of Defence and Security, PA Consulting
- Andy Briggs, Group CEO, Phoenix Group
- Rebecca Richards, Deputy CEO, Rheinmetall UK, Rheinmetall VSI
- Ricardo Mendes, CEO & Co-Founder, Tekever
- Dave Palmer, General Partner, Ten Eleven
Rain Newton-Smith, Chief Executive, CBI, said, “This is a pivotal moment for the UK to align its world-class financial services with its defence ambitions. By working together as ‘Team UK’, we can unlock investment, boost productivity, and secure our economic and national resilience for generations to come.
“We live in a precarious world where our peace and security is being tested. Enhancing our national security is vital, and the government’s commitment to higher defence spending is a key part of this. But at the same time, we must ensure this additional spending supports the UK’s growth mission with lasting impact on our productivity and innovation.
“The UK’s defence and financial services industries are powerhouses behind the UK economy. Rightly identified in the recent Industrial Strategy as two of the eight growth-enhancing sectors, it is vital these sectors drive wider economic growth, revitalise our supply chains and maximise their contribution to our innovation ecosystem to turn the dial on growth.
“With a rapidly changing global landscape, the recommendations in our report offer a generational opportunity to build on the country’s success story to unlock the long-term sustainable and resilient growth businesses and households need.”
Lisa Quest, Managing Partner UK and Ireland, Oliver Wyman said, “The UK defence industry plays a critical role in protecting the nation, and contributes significantly to the country’s security, creating employment, and driving financial prosperity and economic growth.
“As the UK looks to build more independent resilience and accelerate growth, capitalising on the strength of its world leading sectors is key.
“With some of the most advanced and sophisticated financial markets, the UK is uniquely positioned to demonstrate how the financial services sector can bolster growth in defence spending, particularly at a time when NATO allies commit to allocating 5% of GDP to national security.
“The Defence & Economic Growth Taskforce has identified achievable opportunities to further stimulate growth and productivity at the nexus of private and public sector investment and improved dialogue, paving the way for greater stability and security, and ensuring the UK is prepared for long-term resilience.
“Crucial to the success of this initiative is the alignment of private sector spending throughout the entire supply chain to unlock the accelerated flow of capital”.
Aimie Stone, Chief Economist, ADS Group said, “The defence sector currently employs over 180,000 people, delivering £15bn in value to the UK economy, with both figures growing two thirds in the last decade.
“The UK defence sector has the potential to be the UK’s most powerful growth engine, but only with the right financial, regulatory, and political support behind it. As the trade association for the defence and security sectors, we’re committed to working alongside the financial industry in advocating for a whole-of-society approach for defence financing moving forwards. This taskforce report is the latest marker in the sand for our sector that is already delivering intense social dividends on the government’s growth mission.”
