The UK government has said it will invest £400m in defence tech and promised to reform the procurement process for startups in the sector, as European countries scramble to ramp up military spending in the face of a shifting geopolitical climate.
Announcing her Spring Budget on Wednesday, UK finance minister Rachel Reeves said a minimum of 10% of the Ministry of Defence’s equipment budget would be spent on new technologies, including drones and AI-enabled tech.
This would create demand for highly skilled engineers and scientists and deliver new business opportunities for UK tech firms and startups — and is part of plans to become a “defence industrial superpower”, she told parliament.
“We will reform our broken defense procurement system, making it quicker, more agile and more streamlined and giving small businesses across the UK better access to ministry of defense contracts, ” Reeves said.
Reeves announced a further £2.2bn spending for the Ministry of Defence, following previous plans to increase defence spending to 2.5% of the GDP by 2027.
“There’s a genuine opportunity to build up the UK as a European leader on defence tech,” says Dom Hallas, executive director at lobby group Startup Coalition, adding that there’s still work to be done for startups to feel the benefit.
“It’s now a question of whether we can get the structures on procurement and other issues right to make sure that startups can actually sell the stuff they are building.”
The new defence tech budget — and promises to improve the procurement processes for small businesses — is the latest sign the UK government is looking to work closer with startups and tech companies in the sector.
Last week it was revealed that US defence tech Anduril planned to open a factory and R&D facility in the UK.
In 2024, German defence tech Helsing pledged to set up its own manufacturing facility in the UK as part of a £350m investment into the country over a five year period and French AI startup Mistral is said to be courting officials close to both the British and German militaries.
The budget comes following a tech charm offensive from the UK government in recent times.
In February prime minister Keir Starmer wooed AI leaders at an invite-only Downing Street party and the country has announced a flurry of flurry of AI and tech policy moves in 2025.
The government also announced a Matt Clifford-led AI strategy in January, calling for billions of pounds to be ploughed in infrastructure, and signalled plans to create ‘Europe’s Silicon Valley’ in Oxford and Cambridge.
Reeves also promised that the first allocations of a £3.25bn investment fund to make public services more efficient and productive would go towards “pioneering AI tools” to modernise the state and “investment in top technology for the ministry of justice to deliver probation services more effectively”.
Read the orginal article: https://sifted.eu/articles/uk-defence-fund-spring-budget-news/
