**London**: The UK government announced new initiatives focused on increasing small and medium enterprises’ access to defence contracts, aiming for a 2.5% GDP defence spend by 2027. A dedicated hub will facilitate procurement opportunities, enhancing competition and supporting regional economic growth.
The UK government has unveiled new initiatives aimed at boosting the participation of small and medium enterprises (SMEs) in defence contracts, in line with its objective to raise defence spending to 2.5% of gross domestic product (GDP) by April 2027. This announcement comes as part of the government’s broader strategy to enhance the domestic defence supply chain and foster economic growth in the sector.
A central component of this initiative is the establishment of a new hub designed specifically to facilitate SME access to defence procurement opportunities. The Ministry of Defence (MoD) is expected to implement direct spending targets aimed at SMEs by June of this year, a move that is likely to reshape current supply chain dynamics.
Presently, while nearly 70% of defence spending is allocated to businesses based outside London and the South East, a mere 4% reached SMEs during the 2023-24 fiscal year. The introduction of the new hub is intended to close this significant gap by collaborating with suppliers from various regions across the UK, thereby enhancing competition and fostering innovation among smaller firms.
According to the latest data, defence spending supported over 430,000 jobs in the UK last year, with government contracts providing a substantial injection of £28.8 billion into the national industry. Notably, spending has shown regional growth, with the East Midlands witnessing a 30% increase, amounting to £328 million, while Northern Ireland experienced a 20% rise, and Yorkshire and the Humber saw nearly a 19% increase in defence spending.
The government posits that expanding the role of SMEs in defence contracts will not only aid in driving economic growth but will also contribute to job creation and fortify the UK’s defence industrial base, especially in anticipation of the forthcoming Defence Industrial Strategy.
Source: Noah Wire Services
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