---

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.

Defining the defence industry

The defence industry includes firms in aerospace, shipbuilding and weapons manufacturing as well as electronics, communications and other emerging data-driven sectors.

The defence industry is difficult to identify in economic statistics because it cuts across a wide range of sectors and activities. There is no single Standard Industrial Classification (SIC) code, or group of codes, that reliably identifies defence businesses. SIC codes classify businesses according to their main economic activity rather than the markets they serve, so they do not generally distinguish between defence and civilian applications. This is why the defence industry is not included in the Library’s constituency data dashboard on businesses and industries.

This is particularly an issue for large manufacturers whose activities span both defence and civilian markets. For example, Rolls-Royce and Airbus manufacture products for both military and civilian aerospace. The same problem applies further down the supply chain, where many businesses provide products and services with dual-use applications and may supply both defence and non-defence customers.

Where are defence firms located?

Some organisations have compiled maps of defence industry sites. These show that most defence industry activity is based in the South East and South West of England.

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 7 of its Defence Sector Outlook report (2026) 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.

How much do defence businesses contribute to the economy?

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 that estimates the value of goods and services produced in an area, industry or sector, minus the cost of what was needed to produce them. It shows how much value an industry or area adds to the economy.

Estimates vary widely because different estimates use different definitions of the defence industry.

Joint Economic Data Hub estimate

The Joint Economic Data Hub (JEDHub), a collaboration between academia, government and industry that aims to improve understanding of the defence sector’s contribution to the UK economy, estimated in its 2025 report that the defence industry contributed £10.8 billion to the UK economy in 2023, equivalent to around 0.4% of total UK GVA in 2023.

This estimate is based on a survey of 16 respondents and is therefore not representative of all companies operating in the defence sector.

ADS and Oxford Economics estimates

Using a broader definition of the defence industry, ADS, working with Oxford Economics, models its economic output using SIC codes and other data. As defence activity cuts across different industries, these figures are estimates rather than precise measures. Regional figures are based largely on the distribution of defence employment.

On this basis, ADS estimated that the defence industry contributed £15.8 billion to the UK economy in 2025, equivalent to around 0.6% of total UK GVA.

The ADS estimates for defence industry economic output by region 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 £7.4 billion to the economy in 2025. 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 if the firms’ activities actually occur elsewhere.

Where does the government spend defence funding?

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 2024/25, MOD expenditure with industry was £31.9 billion, equivalent to about £460 per person living in the UK.

The South East of England had the highest amount of MOD spending with industry at £7.9 billion and the South West had £6.7 billion.

The South West had the highest spending per person at £1,130 per person. The table below shows how much the MOD spent in each region of the UK in 2024/25.

Source: MOD regional expenditure statistics with industry: 2024/25, Table 2 and Table 4.

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 (such as maintenance). Since it is based on MOD contracts with industry, it can vary from year to year depending on when large contracts (which may cover multiple years) are signed.

How many jobs does the defence industry support?

How many jobs does MOD spending support?

The MOD estimated that its spending supported 274,000 full-time equivalent (FTE) jobs in the UK in 2024/25. This includes UK-based civilian MOD personnel and members of the regular armed forces, as well as jobs in industry supported directly and indirectly by MOD contracts.

Of this overall number of jobs, over half (164,000) were industry jobs directly supported by MOD contracts, roughly 0.7% of all full-time jobs in the UK.

As with economic output, the South East and South West had the highest number of direct jobs supported by MOD expenditure, with 78,000 roles between them. Together, they accounted for almost half of all direct jobs supported by MOD spending.

The table below shows the number of jobs directly supported by MOD contracts in 2024/25, broken down by the regions and nations in the UK.

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

Please note direct job estimates are measured in full-time equivalent (FTE) jobs. However, the percentage of all full-time jobs in each region or nation is calculated using full-time employee jobs, as this is the closest comparable measure available. These percentages should therefore be treated as approximate.

Wider estimate on jobs in the defence industry

Using a broader definition of the defence industry, the ADS group estimated that the defence industry directly supported 189,500 FTE jobs in 2025.

This estimate of jobs is higher than the MOD estimate of 164,000 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 89,000.

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 2026, page 7

As with the MOD jobs data, direct job estimates are measured in full-time equivalent (FTE) jobs. However, the percentage of all full-time jobs in each region or nation is calculated using full-time employee jobs, as this is the closest comparable measure available. These percentages should therefore be treated as approximate.