Table of Contents
Executive Summary
-
- Market size
-
- Figure 1: UK defence departmental expenditure limits and defence spending, 2012/13-2016/17, (£ million)
- Figure 2: MoD equipment expenditure, 2013/14-2017/18, (£ million)
- Market trends
- North American and Western Europe spending rose in 2016, but growth is still lower than the early 2010s
-
- Figure 3: Defence spending 2012 and 2016, world’s top six, (% world share in $ billion at current prices and converted at the exchange rate for the given year)
- UK remains Europe’s leading defence exporter, despite third successive annual decline in new business
- Market factors
- Uncertainty around Brexit negotiations could lead to changes in industry plans
- Military capability affected by poor condition of MoD’s estate
- Industry development
- Lockheed Martin maintains its position as the largest defence company in the world
-
- Figure 4: World top 10 defence companies, by revenue, 2016, (£ million)
- Forecast
- Defence DEL forecast to rise in order to boost future capability and meet emerging threats
-
- Figure 5: Forecast UK planned defence DEL, 2017/18-2020/21, (£ billion)
- Competition in defence exports expected to rise, which will threaten the UK’s leading European position
- What we think
Key Insights
-
- How will changes to UK warship construction affect the market?
- Will the UK’s position in major global defence and military strategy decisions be affected after it leaves the EU?
Introduction
-
- Definitions
- Methodology
- Abbreviations
- Political
-
- Figure 6: Trends in public sector total managed expenditure, 2006/07-2017/18*, (£ billion)
-
- Figure 7: Trends in public sector total managed expenditure, 2006/07-2017/18*, (£ billion)
- Market positioning
UK Economy
-
- Key points
- Overview
-
- Figure 8: Forecast GDP development 2017-21, (% annual growth)
- Figure 9: UK GDP quarterly development, 2007-17, (% quarterly growth and gdp in £ billion)
- Inflation
- Interest rates
- House prices
-
- Figure 10: UK house price changes, 2006-17, (12 month % change)
- Consumer spending
- Manufacturing
-
- Figure 11: UK manufacturing, 2014-17, (Index, 2013 = 100)
- Business investment
-
- Figure 12: UK GFCF, 2004-17, (£ million, chained volume measures, seasonally adjusted)
- Imports
- Exports
Market Factors
-
- Key points
- Lowest half-year GDP growth since 2012 could impact equipment procurement
-
- Figure 13: GDP growth rate, Q1 2013-Q2 2017, (% change on previous quarter)
-
- Figure 14: GDP growth rate, Q1 2013-Q3 2017, (% change on previous quarter)
- Uncertainty around Brexit negotiations could lead to changes in industry plans
- Military capability affected by poor condition of MoD’s estate
- Other factors
- Regulatory framework changes under the Conservative government between 2015 and 2017
- The European Council Common Position and the Consolidated EU and National Arms Export Licensing Criteria
- The Defence Industrial Policy
- The Defence Growth Partnership
- The Arms Trade Treaty
- Strategic Defence Policy
- 2015 NSS and the SDSR
- Royal Navy
- Army
- Royal Air Force
- Defence Operating Model
- Defence cooperation agreements
Market Size
-
- Key points
- Defence DEL and spending both rise for first time since 2013/14
-
- Figure 15: The UK defence departmental expenditure limits and defence spending, 2012/13-2016/17, (£ million)
-
- Figure 16: UK Defence departmental expenditure limits and defence spending, 2012/13-2016/17, (£ million)
- Single-use military equipment continues to form largest share of capital expenditure
-
- Figure 17: The UK defence departmental capital expenditure limits, 2013/14-2017/18, (£ million)
-
- Figure 18: The UK defence departmental cash resource expenditure limits, 2013/14-2017/18, (£ million)
-
- Figure 19: UK defence departmental cash resource expenditure limits, 2013/14 and 2017/18, (£ million)
- Figure 20: The UK defence annually managed expenditure limits, 2013/14-2017/18, (£ million)
-
- Figure 21: The UK defence annually managed expenditure limits, 2013/14 and 2017/18, (£ million)
- Figure 22: MoD equipment expenditure, 2013/14-2017/18, (£ million)
-
- Figure 23: MoD equipment expenditure, 2013/14-2017/18, (£ million)
-
- Figure 24: MoD research & development expenditure outturn, 2011/12-2015/16, (£ million)
- MoD Procurement Contracts
-
- Figure 25: MoD major equipment projects, as at 31 march 2016, (£ million)
- PFI
-
- Figure 26: MoD PFI projects, 2016, (year and £ million)
Market Trends
-
- Key points
- North American and Western Europe spending rises on previous year, but growth is still lower than the early 2010s
-
- Figure 27: Defence spending 2012 and 2016, ($ billion at current prices and converted at the exchange rate for the given year, % world share)
-
- Figure 28: Defence spending 2012 and 2016, world’s top six, (% world share in $ billion at current prices and converted at the exchange rate for the given year)
- UK remains Europe’s leading defence exporter, despite third successive annual decline in new business
-
- Figure 29: Identified orders of uk exports of defence aircraft and equipment, 2012-16, (£ million)
-
- Figure 30: Identified orders of UK exports of defence aircraft and equipment, 2012-16, (£ million)
- Armed forces equipment and formations trends
- Royal Navy and Royal Auxiliary Vessels
-
- Figure 31: Royal Navy and Royal Auxiliary Fleet of the UK Armed Forces, 2016 and 2017, (number)
- Aircraft fleet
-
- Figure 32: Fixed-wing platforms and unmanned aircraft systems of the UK Armed Forces, 2016 and 2017, (Number)
-
- Figure 33: Rotary-wing platforms of the UK Armed Forces, 2016 and 2017, (number)
- Militarily-useful British-registered vessels
-
- Figure 34: Number of militarily-useful British-registered vessels (passenger, tanker and dry cargo), 2012-16, (number)
- Figure 35: Number of militarily-useful British-registered vessels (fishing and specialist), 2012-16, (number)
- Land equipment
-
- Figure 36: Land equipment of the UK Armed Forces, 2016 and 2017, (number)
- Conventional Armed Forces in Europe Treaty Holdings
-
- Figure 37: Number of tanks and artillery holdings in the UK, Germany, Cyprus and Gibraltar within the scope of the Conventional Armed Forces in Europe Treaty, 2008-17, (number)
-
- Figure 38: Number of tanks and artillery holdings in the UK, Germany, Cyprus and Gibraltar within the scope of the Conventional Armed Forces in Europe Treaty, 2008, 2011, 2014 and 2017, (number)
- Figure 39: Number of armoured combat vehicle holdings in the UK, Germany, Cyprus and Gibraltar within the scope of the Conventional Armed Forces in Europe Treaty, 2008-17, (number)
-
- Figure 40: Aircraft holdings in the UK, Germany, Cyprus and Gibraltar within the scope of the Conventional Armed Forces in Europe Treaty, 2008-17, (number)
-
- Figure 41: Military Holdings in the UK, Germany, Cyprus and Gibraltar within the scope of the Conventional Armed Forces in Europe Treaty, by Equipment Group, 2013 and 2017, (Number)
Industry Structure
-
- Key points
- Industry development
- Improvements made to global military spending but at a slow rate
- Lockheed Martin maintains its position as the largest defence company in the world
-
- Figure 42: World top 10 defence companies, by revenue, 2016, (£ million and % of company’s total revenue)
-
- Figure 43: World top 10 defence companies, by revenue, 2016, (£ million)
- SDSR has allowed the MoD to push ahead with the awarding of military equipment contracts...
- ...but barriers exist that can restrict the entrance of SMEs and non-traditional defence partners into the industry
- Exports and the UKTI DSO
- Single Source Regulations Office
- Industry structure
-
- Figure 44: Analysis of the changes in the structure of the weapons and ammunition industry, 2013-17, (number of factories and businesses)
- Figure 45: Analysis of the changes in the structure of the air, spacecraft and related machinery industry, 2013-17, (number of factories and businesses)
-
- Figure 46: Analysis of the changes in the structure of the ship and floating structures industry, 2013-17, (number of factories and businesses)
- Figure 47: Analysis of the changes in the manufacture of military fighting vehicles industry, 2013-17, (number of factories and businesses)
- Structure by employment
-
- Figure 48: Analysis of the employment structure of the weapons and ammunition manufacturing industry, 2016 and 2017, (number of employees and factories)
-
- Figure 49: Analysis of the employment structure of the air, spacecraft and related machinery industry, 2016 and 2017, (number of employees and factories)
-
- Figure 50: Analysis of the employment structure of the shipbuilding and repair industry, 2016 and 2017, (number of employees and factories)
-
- Figure 51: Analysis of the employment structure of the manufacture of military fighting vehicles industry, 2016 and 2017, (number of employees and factories)
- Structure by turnover
-
- Figure 52: Analysis of the financial structure of the weapons and ammunition manufacturing industry, 2016 and 2017, (£000 and number of companies)
-
- Figure 53: Analysis of the financial structure of the air, spacecraft and related machinery manufacturing industry, 2016 and 2017, (£000 and number of companies)
-
- Figure 54: Analysis of the financial structure of the shipbuilding and repair industry, 2016 and 2017, (£000 and number of companies)
-
- Figure 55: Analysis of the financial structure of the manufacture of military fighting vehicles industry, 2016 and 2017, (£000 and number of companies)
- Defence contracts
Company Profiles
AWE Management
-
-
- Figure 56: Financial analysis of AWE Management, 2012-16, (£ million)
- Company strategy
-
BAE Systems
-
-
- Figure 57: Financial analysis of BAE Systems, 2012-16, (£ million)
- Company strategy
- BAE Systems’ Surface Ships
-
- Figure 58: Financial analysis of BAE Systems’ Surface Ships, 2012-16, (£ 000)
- Company strategy
- BAE Systems (Operations)
-
- Figure 59: Financial analysis of BAE Systems (Operations), 2012-16, (£ million)
- Company strategy
-
Cobham
-
-
- Figure 60: Financial analysis of Cobham, 2012-16, (£ million)
- Company strategy
-
EntServ UK (formerly known as HP Enterprise Services UK Limited)
-
-
- Figure 61: Financial analysis of Entserv UK Limited (formerly Hewlett Packard Enterprise Services UK Limited), 2012-16, (£ million)
- Company strategy
-
General Dynamics UK
-
-
- Figure 62: Financial analysis of General Dynamics UK, 2012-16, (£ million)
- Company strategy
-
Leonardo MW Limited (formerly Leonardo Helicopters)
-
-
- Figure 63: Financial analysis of Leonardo MW Limited (formerly Leonardo Helicopters), 2012-16, (£ million)
- Company strategy
-
Lockheed Martin (UK)
-
-
- Figure 64: Financial analysis of Lockheed Martin (UK), 2012-16, (£000)
- Company strategy
-
NETMA
QinetiQ
-
-
- Figure 65: Financial analysis of QinetiQ, 2013-17, (£ million)
- Company strategy
-
Rolls-Royce
-
-
- Figure 66: Financial analysis of Rolls-Royce, 2012-16, (£ million)
- Company strategy
-
- Figure 67: Profiled companies’ turnover, 2012-16, (£ million)
-
Forecast
-
- Key points
- Market size
- Defence DEL forecast to rise to boost future capability and meet emerging threats
-
- Figure 68: Forecast UK defence DEL, 2016/17-2020/21, (£ billion)
-
- Figure 69: Forecast UK defence DEL, 2016/17-2020/21, (£ billion)
- Figure 70: Forecast UK planned defence DEL, 2017/18-2020/21, (£ billion)
-
- Figure 71: Forecast UK planned defence DEL, 2017/18-2020/21, (£ billion)
- Defence equipment plan
-
- Figure 72: Post-main gate major equipment projects, 2016, (£ million)
- New support model launched for Royal Navy following doubts over warship replacement plans
- Competition in defence exports expected to rise, threatening the UK’s leading European position
- Changes made to merger regulations to improve scrutiny of transactions that could affect national security
- Unmanned aerial vehicles are becoming a more dominant sector as the nature of conflict continues to change
- Cyber security becoming an integral part of defence strategy
- PFI
-
- Figure 73: Estimated payment under MoD PFI contracts, based on signed defence deals as of March 2016, (£ million)
Further Sources and Contacts
-
- Trade associations
- Aerospace & Defence Industries Association of Europe
- ADS Group Limited
- British Naval Equipment Association
- Northern Defence Industries (NDI)
- Trade magazines
- Aerospace Engineering/Aerospace & Defence Technology (Monthly)
- Defence Contracts Bulletin
- DefenceEye
- Defence Global
- Defence Helicopter
- Global Defence Technology
- Helicopter International
- IHS Jane’s Defence Weekly
- The Engineer
- Trade exhibitions
- Eurosatory
- Farnborough 2018
- Helitech International 2018
- International Defence Exhibition & Conference 2019
- ITEC 2018
Back to top