The Strategic Defence Review has been billed as a 10-year stock take of UK defence and strategic priorities and will be eagerly read by contractors for hints at the government’s spending plans.
This SDR, called by Prime Minister Sir Keir Starmer when he came to office last July, was undertaken in the shadow of the Ukraine war.
Published on Monday, it emphasises a shift towards “warfighting readiness”, responding to heightened threats from “peer” adversaries such as Russia and China.
What is in the SDR?
While areas such as cyber conflict and the RAF receive investment, the Royal Navy stands out as the primary winner.
The service will expand its fleet of nuclear-powered attack submarines from seven to 12, with up to 12 new attack subs made in partnership with Aukus allies US and Australia by the late 2030s.
This alone accounts for nearly half the projected spending on the weapons systems outlined in the SDR.
However, the Navy’s focus will also shift from an expeditionary force — one boasting two aircraft carriers and designed to fight distant wars against low-tech adversaries — to a service more focused on home defence.
Much like during the cold war, the Navy’s focus will be defending the north Atlantic from encroachment by Russian submarines under a plan known as “Atlantic Bastion”.
What about the regular army?
The target size of the army will remain the same — at 73,000 regular soldiers, according to the SDR. The current figure is about 71,000, and the SDR recommends a slight increase in personnel “if funding allows”.
Instead of a dramatic increase in troop numbers, the SDR recommends using technology, drones and software to “increase lethality tenfold”.
The UK must be “a leading tech-enabled defence power, with an ‘Integrated Force’ that deters and fights and wins through constant innovation at wartime pace”.
To do this, the MoD plans to deliver, among other things, a £1bn “digital targeting web”, which is an artificial intelligence-driven software designed to hoover up battlefield data and use it to enable better and faster decision making.
What is not in the SDR?
Donald Trump was not mentioned by name in the document — though the global unpredictability caused by his presidency in the US was tackled diplomatically.
“States are seeking to reshape the rules based on the international order that has governed international relations since the Second World War,” it said. “The clear shift in US strategic priorities underlines how urgent and different managing strategic competition now is.”
A new plan to arm aircraft with tactical nuclear weapons — introduced over the weekend — was not mentioned in the SDR, though defence secretary John Healey told Sky News it was “an option”.
The review did recommend “commencing discussions with the United States and Nato on the potential benefits and feasibility of enhanced UK participation in Nato’s nuclear mission”.
What does it mean for industry?
The review also promises a new partnership with industry, including a “radical root-and-branch review” of procurement. New investment in novel technologies and advanced manufacturing will help to ensure that defence investment delivers “both for the warfighter and for the economy”.
More details will be provided in the upcoming Defence Industrial Strategy — expected in the coming weeks — but British defence companies are likely to be among the biggest corporate winners from the extra spending pledged by Starmer.
America’s Lockheed Martin, which manufacturers the F-35 fighter jet, could also benefit if the UK follows through on buying more of the aircraft.
Defence technology players such as Europe’s Helsing and America’s Anduril will also hope to secure work on new programmes focused on new autonomous systems, including drones.
How did investors react?
Shares in contractors involved in building and maintaining Britain’s submarine fleet jumped on Monday after the government unveiled plans to expand it and shore up the country’s nuclear deterrent.
BAE Systems, which builds submarines for the Royal Navy, including the Astute class of nuclear-powered attack boats, has already been investing heavily in expanding its Barrow-in-Furness shipyard in north-west England.
The FTSE 100 group, which produces about 80 per cent of the munitions for Britain’s armed forces, should also benefit from a pledge to build six new munition factories around the UK.
Other companies involved in the submarine supply chain, including Rolls-Royce and Babcock International, are also in line for more work. Rolls-Royce, the FTSE 100 engineering group, builds the nuclear reactors that power British submarines, while Babcock maintains and services all of the UK’s boats. Shares in Babcock on Monday jumped more than 7 per cent to an eight-year high.
Qinetiq, which is part of an industry team that also includes missile champion MBDA and Italy’s Leonardo developing a new, cutting-edge, laser weapon for the Ministry of Defence, will also benefit.
A pledge to invest more in long-range weapons should also benefit MBDA, which is owned by BAE, Leonardo and Airbus.
What does it mean for the long term?
While supposedly a 10-year review, the fate of past SDRs suggest its shelf life might be more limited.
The last SDR was published in 2021, just four years ago, and recommended “a strategic pivot towards the Indo-Pacific region to counter China’s influence and deepen ties with allies like Australia, India, and Japan”, in line with the prevailing strategic priorities of the time.
This SDR, undertaken in the shadow of the Russia’s full-scale invasion of Ukraine, has de-emphasised global reach of this type. While calling China a “persistent challenge”, instead the solid focus is Russia, which is a “pressing and immediate threat”. Meanwhile, the focus is the north Atlantic, not the Pacific.
“We have previously seen defence reviews lionise UK industry but then fail to take the next step and invest,” said Clive Higgins, chief executive of Leonardo in the UK.
“The defence investment plan must be adequately funded in order to deliver the ‘innovation at a wartime pace’ required by the strategy. We must see more nimble and partnership-based procurement, harnessing the UK’s market power for the good of our own onshore industry.”
