Defence in the UK is changing with the country having to adapt to the growing threat from its adversaries as well as strategically navigating its political relationships with its allies in a strained geopolitical climate. As part of its response to dealing with these challenges the new UK Government commissioned a Strategic Defence Review (SDR) shortly after coming into office and almost a year later the report was published.

This was followed by the Government's Modern Industrial Strategy, published in June 2025, which is vitally important for understanding the broader strategy and will complement the recommendations made in the SDR. The industry awaits, with anticipation, the Defence Sector Plan, expected to be released by the Government in the not-too-distant future. The Government promises that it will set out how it intends to reform, grow, and innovate to build the UK's industrial base — helping scale small and mid-tier companies and create industrial leaders. The ambition is to make the UK a defence industrial superpower by 2035.

Strategic Defence Review

As part of strengthening Europe, the UK and the EU agreed a UK-EU Security & Defence Partnership.[1] The UK has pledged to meet the NATO target of 5% of GDP on national security by 2035.[2] However, some commentators argue that an arbitrary number is not what is needed to improve collective security in Europe as countries will aim to achieve their 5% as opposed to seeking more efficient and effective procurement in supply chains as well as cross-national collaboration.[3]

Both of these initiatives in addition to the UK and Germany signing the Treaty on Friendship and Bilateral Cooperation as alluded to in the UK's Modern Industrial Strategy, align with the ambition in the Strategic Defence Review of NATO first.[4] However, broader questions arise over how much collaboration can really occur with many countries keen to protect national interests and IP, particularly in the space sector.[5] The Future Combat Air System has recently come into difficulty due to recent disagreements between Dassault and Airbus over work share.[6]

Despite this, international collaboration is still essential noting the launch of the Global Combat Air Programme (involving the UK, Italy, and Japan) and the recent incorporation of the joint venture company for the project, Edgewing.[7] The UK remains committed to the AUKUS programme which will enable the UK to grow its nuclear powered submarine fleet to up to 12 vessels.[8] Both of those programmes demonstrate capability partnerships that strengthen collective security.[9]

Defence technology strategy

It is essential that the Government fully embraces technology so that the UK can achieve its stated goal of being a "leading tech-enabled defence power".[10] As part of this, the Ministry of Defence (MoD) will establish by the end of 2025, a new CyberEM Command within Strategic Command.[11] This will be essential for defending Britain from daily attacks in the 'grey zone'.[12] The Government is also aware of the role that civilians and reservists will play in the CyberEM Command noting that the skills and expertise currently lies in the civilian sector.[13]

Quantum could revolutionise optimisation, communication, cartography and simulation tasks. Developing quantum-resistant cryptography is essential for future defence communications.[14] Whilst quantum clocks developed by the Defence, Science and Technology Laboratory could be used in guided missiles to improve accuracy.[15]

The Government has set out a variety of ways to embrace technology; some examples include: investing £1 billion to integrate the UK Armed Forces through a new Digital Targeting Web, scheduled for delivery in 2027, automating at least 20% of HR, commercial functions and finance by July 2028, investing in Defence Intelligence to build its capability and capacity, and creating a protected Defence AI Investment Fund.[16] The MoD is also establishing a Defence Uncrewed Systems Centre by February 2026 noting the major impact that uncrewed systems have had on the Ukraine war.[17]

The defence technology market will likely be strengthened by the £330 million investment into the National Security and Strategic Investment Fund as well as the National Wealth Fund identifying dual-use technologies as a priority sector to consider investments into in March 2025[18].

Regulatory defence procurement reform

A seismic shift in defence procurement is required to deliver the Government's ambition, with 6.5 years being the current average time for a contract to be awarded for projects valued above £20 million.[19] In response to this the SDR has set out a new segmented approach to procurement which should be implemented by March 2026.[20] The segmented approach splits defence procurement into three categories - major modular platforms (contracting within 2 years), pace-setting spiral and modular upgrades (contracting within 1 year) and rapid commercial exploitation (contracting within 3 months).[21]

There is also a push to reduce by at least 50% the burden of Defence Standards and Conditions.[22] This may help the SME eco-system particularly if some of the more 'onerous' sub-contractor obligations are dropped. The supply chain will be interested to see how/if any of the Defence Standards and Conditions around IP are amended or removed as this is often a difficulty on MoD projects.

Finally, the Government states that they will amend the Single Source Contract Regulations, so that the MoD can incentivise industry investment in infrastructure and asset management.[23]

If you would like to discuss any of the themes and trends shaping the Aviation, Aerospace and Defence (AAD) sector — and explore how we can work together — please contact Elizabeth Williams.

Gowling WLG is a sector-focused, leading international law firm. We offer strong legal technical capability and deep sector knowledge across multiple jurisdictions. Our team includes over 120 lawyers spanning a range of legal disciplines, all actively engaged in the AAD sector.

Footnotes:

[1] UK-EU security and defence partnership - GOV.UK
[2] UK to deliver on 5% NATO pledge as Government drives greater security for working people - GOV.UK
[3] Spending 5 per cent on defence doesn’t make Nato stronger
[4] The UK's Modern Industrial Strategy p26, Friendship and Bilateral Cooperation Treaty: The 17 Projects the UK and Germany will deliver together - GOV.UK and Strategic Defence Review 2025 – Making Britain Safer: secure at home, strong abroad p4.
[5] European plans to create space champion face challenging timeline
[6] European next-gen fighter jet faces ‘moment of truth’ in coming months – POLITICO
[7] About Edgewing
[8] Strategic Defence Review 2025 – Making Britain Safer: secure at home, strong abroad p6.
[9] Strategic Defence Review 2025 – Making Britain Safer: secure at home, strong abroad p78.
[10] Strategic Defence Review 2025 – Making Britain Safer: secure at home, strong abroad p44.
[11] Strategic Defence Review 2025 – Making Britain Safer: secure at home, strong abroad p123.
[12] Strategic Defence Review 2025 – Making Britain Safer: secure at home, strong abroad p6 and Grey zone – activities that fall below perceived thresholds for military action and across areas of responsibility of different parts of the government e.g. cyberattacks, information campaigns and other hostile activities that fall below the threshold of armed conflict – Defence in the Grey Zone - Committees - UK Parliament.
[13] Strategic Defence Review 2025 – Making Britain Safer: secure at home, strong abroad p123.
[14] Quantum Computing Fair: Shaping the future world of Defence | Royal Air Force
[15] Massive British breakthrough in Quantum defence tech
[16] Strategic Defence Review 2025 – Making Britain Safer: secure at home, strong abroad pp. 70, 97, 127
[17] Strategic Defence Review 2025 – Making Britain Safer: secure at home, strong abroad pp 20 and 97.
[18] The UK's Modern Industrial Strategy p43, Industrial Strategy: Digital and Technologies Sector Plan p15 and Strategic_Steer_to_NWF_-_final.pdf p4.
[19] Strategic Defence Review 2025 – Making Britain Safer: secure at home, strong abroad p51.
[20] Strategic Defence Review 2025 – Making Britain Safer: secure at home, strong abroad p62.
[21] Strategic Defence Review 2025 – Making Britain Safer: secure at home, strong abroad p62.
[22] Strategic Defence Review 2025 – Making Britain Safer: secure at home, strong abroad p62.
[23] Strategic Defence Review 2025 – Making Britain Safer: secure at home, strong abroad pp 62 and 102.