Revealing Insights: How Defense Spending Propels UK Economic Growth

Findings from Oxford Economics have unveiled the significance of BAE Systems’ role in bolstering the UK economy through employment, innovation, and national supply chains. Beyond nurturing skills and technological advancements vital for national defence, the analysis indicates that BAE Systems’ activities are fostering enhanced productivity and aligning with the Government’s initiatives to promote regional equality. 

The Company’s extensive presence in the UK, encompassing over 50 locations and a broad supply chain, facilitated the support of 143,000 jobs nationwide in 2020, contributing more than £10 billion to the UK’s GDP, which represents 0.5% of the domestic economy. 

Charles Woodburn, Chief Executive of BAE Systems, stated: “Our industry not only secures national defence and safety but also delivers exceptional economic value that fuels the prosperity of the UK. The expenditures we allocate for highly skilled positions, innovation, and our vast supply chain benefit countless businesses and tens of thousands of individuals along with their communities.”

Minister for Defence Procurement, Jeremy Quin MP, remarked: “Across all regions of the UK, Defence is a catalyst for economic growth, safeguarding the economy, generating employment opportunities, and nurturing skills. 

“BAE Systems stands as a beacon in this advancement, assisting us in bridging inequalities across the nation by sustaining tens of thousands of jobs as we recover from the impacts of COVID-19. Through the Defence and Security Industrial Strategy, we are cementing collaborations among governmental bodies, industry, and educational institutions to ignite British innovation.”

Information released in the ‘BAE Systems’ contribution to the UK economy’ report reveals that in addition to the Company’s own 35,300 highly skilled employees in the UK, nearly 59,000 jobs are sustained within the supply chain, with upwards of 49,000 jobs supported through employee and supplier expenditures. 

The Company collaborates with 5,000 UK suppliers from Scotland to the south west of England who benefited from £3.8 billion worth of spending in 2020. With more than 40% of its workforce located in the UK’s most disadvantaged local authorities, BAE Systems also invested £700 million with businesses in these regions, creating a notable impact on the local communities it serves and playing a significant part in the ‘levelling up’ initiative.

Over two-thirds of the Company’s workforce in the UK holds engineering-related positions, and the research found that the highly specialized and technical nature of their roles leads to an average productivity of £83,000 per employee. This figure is 17% higher than the UK manufacturing sector and nearly 30% above the national average. 

To cultivate a sustainable talent pool for the future, the Company allocated £93 million towards skills, training, and development initiatives in 2020. This included more than 2,000 apprentices and nearly 600 graduates undergoing training in diverse roles ranging from electronics and electrical engineering to structural, software, and research engineering, as well as manufacturing, operations, and project management. In its ongoing commitment to youth, BAE Systems will recruit nearly 1,700 apprentices and graduates nationwide this year – a 25% increase from the previous year and the most significant intake offered in a single year. 

In addition to its commitment to workforce development, BAE Systems maintains its investment in research & development, self-funding over £100 million in innovation in the UK and ranking as the ninth largest patent applicant in the country. The Company also conducted over £1.1 billion in research activities on behalf of the UK Government, aiding the nation in advancing technological progress. 

The international dimension of BAE Systems, with operations in Europe, the Middle East, Asia, Australia, and the US, allowed the Company to export £3.9 billion worth of goods and services from the UK – accounting for 0.7% of all UK exports in 2020.