The contribution of the defence industry to UK regions and countries

The government’s industrial strategy identifies defence as one of eight priority sectors with the greatest potential to drive economic growth. It describes the defence industry as the cornerstone of the UK’s national security, which underpins wider economic prosperity.

In September 2025, the government published a more detailed defence industrial strategy, describing defence as an “engine for growth” and announcing £250 million for new Defence Growth Deals in Plymouth, South Yorkshire, Northern Ireland, Scotland and Wales to create jobs and support innovation.

The defence industry includes firms in aerospace, shipbuilding and weapons manufacturing as well as electronics, communications and other emerging data-driven sectors. Government research in 2017 found that defence firms were common in a variety of sectors beyond traditional defence-related manufacturing, for example “IT consultancy”.

The defence industry is complex and difficult to define in economic statistics because it covers such a wide range of sectors. There is no Standard Industrial Classification (SIC) Code or collection of codes that identifies defence firms well. SIC codes are the traditional system for classifying industries in official statistics and company databases. This is why the defence industry is not included in the Library’s constituency data dashboard on businesses and industries.

Additionally, many of the major defence manufacturers are companies that span several activities, not all of which are necessarily defence related. For example, Rolls Royce and Airbus manufacture both civilian and defence aerospace engines and aircraft. SIC codes do not separate civilian and defence applications.

Companies in the supply chain for the defence industry are even more difficult to identify. Many products and services supplied to the defence industry have dual-use (both civilian and military) applications.

Some organisations have compiled maps of defence industry sites.

The Aerospace Defence and Space Group (ADS), a trade body for the defence industry, publishes a high-level map of ADS defence sector member sites on page 9 of its Defence Sector Outlook report and lists of its members by region.

The Campaign Against Arms Trade (CAAT), which describes itself as a UK-based organisation working to end the international arms trade, has compiled information about companies operating in the arms trade. It produces a map and list of arms companies operating in the UK, first released in 2011, that can be searched by place or postcode.

Defence industry organisations estimate the defence industry’s economic output to be around £10 billion to £15 billion a year. This is the industry’s gross value added (GVA), a measure of economic output similar to GDP. Estimates vary widely because the defence industry is difficult to define.

The Joint Economic Data Hub (JEDHub), a collaboration between academia, government and industry on defence economic data, estimated the industry contributed £9.5 billion to the economy in 2022, based on a survey of 22 major defence companies in the UK. This was around 0.4% of the UK’s total GVA in 2022.

Using a broader definition of the defence industry, the ADS group estimated that the defence industry contributed £15 billion to the economy in 2024. This was around 0.6% of the UK’s total GVA in 2024.

The ADS estimates for defence industry economic output by region and country are shown in the table below.

Source: House of Commons Library correspondence with ADS

The defence industry’s output is predominantly in the South East and South West, which together contributed an estimated £7.1 billion to the economy in 2024. This was 47% of defence industry economic output according to ADS. Defence firms are often headquartered in the South East, which can skew the regional figures.

The Ministry of Defence (MOD) publishes regional statistics on its own defence expenditure with industry (how much it spends on contracts with defence firms). In 2023/24, MOD expenditure with industry amounted to £28.8 billion, equivalent to about £420 per person living in the UK.

The South East of England had the highest amount of MOD spending with industry at £7.1 billion and the South West had £6.9 billion. The South West had the highest spending per person (£1,190 per person), with all other UK regions below £750 per person. The table below shows how much the MOD spent in each region and country in the UK in 2023/24.

Source: MOD regional expenditure statistics with industry: 2023/24, Table 4 and Table 2.

MOD defence expenditure with industry is only part of total defence spending in a region, for example it does not include personnel costs or spending on the defence estate. Since it is based on MOD contracts with industry, it can vary from year to year depending on when large contracts are signed.

The MOD estimated that its spending supported 463,000 full-time equivalent (FTE) jobs in the UK in 2023/24, which is about one in every 60 jobs. This includes UK-based MOD civilian and Regular Armed Forces personnel, as well as jobs in industry supported directly and indirectly by MOD contracts.

151,000 jobs in the UK were directly supported by MOD contracts in 2023/24.

As with economic output, the South East and South West had the highest number of direct jobs supported by MOD expenditure, with 76,000 roles between them. Together, they accounted for half of all direct jobs supported by MOD spending.

The table below shows the number of jobs directly supported by MOD contracts in 2023/24, broken down by the regions and nations in the UK.

Source: MOD supported employment estimates: 2023/24, Table 2

Using a broader definition of the defence industry, the ADS group estimated that the defence industry directly supported 181,500 FTE jobs in 2024.This estimate of jobs is higher than the MOD estimate of 151,000 because the MOD includes only jobs supported directly by MOD contracts whereas ADS figures include jobs in the defence industry more generally, including jobs supported by industry investment and revenue from exports.

Once again, the South West and South East had the highest number of direct jobs supported by MOD expenditure, totalling 85,250.

The table below shows ADS estimates for jobs that were directly supported by the defence industry by the regions and nations of the UK.

Source: ADS, ADS Defence Sector UK Outlook 2025, page 9.