The UK Unveils “Team UK” Strategy to Align Defence Spending with Economic Growth
The UK government has launched a coordinated strategy to link national defence priorities with regional economic development, introducing a “Team UK” approach that brings together the Ministry of Defence, HM Treasury, private investors, and leading defence firms. The Defence and Economic Growth Taskforce, co-chaired by Chancellor Rachel Reeves and Defence Secretary John Healey, released a report recommending a series of structural reforms aimed at unlocking high-value jobs and stimulating growth across the United Kingdom. The initiative marks a shift in industrial policy, viewing the defence sector not solely as a cost centre, but as a lever for national productivity, innovation and employment.
One of the first tangible outcomes of this agenda is the announcement by defence tech firm Helsing of a £350 million investment in the UK’s first “Resilience Factory” in Plymouth. The site will produce AI-powered miniature submarines intended to secure undersea infrastructure and support allied naval operations. Originally a continental firm, Helsing has chosen the UK as a manufacturing and R&D base, reflecting its alignment with British defence industrial strategy and confidence in the government's commitment to dual-use innovation. The new facility is expected to generate a significant number of high-skilled jobs in the South West, while embedding AI and autonomy deeper into British naval capabilities.
At the core of the Taskforce’s recommendations is the proposal for a national “Team UK” framework, integrating government, industry and finance in the planning and delivery of future defence capability. The report calls for structural reform in procurement processes, stronger coordination across departments, and a focus on scalable dual-use technologies. This model is designed to enable faster adoption of innovation while reinforcing sovereign supply chains. It also includes the introduction of regional Defence Growth Deals, aimed at redistributing the benefits of defence expenditure across the UK’s industrial and geographic base.
The initiative aligns with the government’s broader defence commitment to raise spending to 2.6% of GDP by April 2027. The Ministry of Defence now supports 151,000 direct jobs, an increase of 14,000 from the previous year. According to Chancellor Reeves, this investment is part of a wider “Plan for Change,” intended to secure the country against evolving threats while ensuring that defence spending serves as an engine for domestic growth. Secretary Healey emphasised that the strategy also aims to modernise procurement, support innovators, and open access to defence contracts for small and medium-sized enterprises.
Implementation of the Taskforce recommendations is already underway. The government has begun developing a Defence SME Hub, initiated planning for a new Defence Exports Office, and committed to launching regional Defence Growth Deals during the upcoming Spending Review. The remaining proposals will be evaluated by the cross-Whitehall Defence Growth Board and the Defence Industrial Joint Council. The structure of the Taskforce itself—led by the CBI, with consulting support from Oliver Wyman and input from twenty industry members—signals a new phase in British defence policy, characterised by public-private co-design, long-term capability planning, and an industrial strategy integrated into the defence mission.
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Government and business put forward “Team UK” approach to unleash defence sector's potential