The Budget: How our sectors are the key to economic growth

Written by Nathan Mathiot, ADS Head of Policy

It is undeniable that this Government currently faces a significant financial challenge. Every fiscal policy decision is being treated as a trade-off with significant opportunity cost. We recognise this reality in our correspondence with Government and political stakeholders. However, there is also a cost to consider if the UK’s aerospace, defence, security and space sectors are not fully supported.

Intelligent, targeted interventions to support the aerospace, defence, security and space markets would stimulate major economic growth, fueling prosperity across communities and providing returns to the Treasury well beyond their initial outlay. To fail to adequately support industries that increased their economic value to the UK by 50% in the last decade despite significant challenges, would be an unfortunate missed opportunity to contribute to the Government’s growth mission.

It is in this context that the Government’s commitment to deliver a new industrial strategy has been warmly welcomed by our sectors. In this era of fierce global competition, the UK needs a strategic approach to securing investment in the sectors that form the backbone of the UK’s industrial prowess.

The Budget must continue on this path, recognising that the aerospace, defence, security and space sectors are highly globalised, so the competition for securing jobs and investment in the UK is vast. This is the reality that makes it so important for the Government to make the UK an attractive place to invest. This includes in aerospace, where a long-term pathway for supporting R&D and industrialisation through the Aerospace Technology Institute must be established to allow this sector to maintain its valuable UK manufacturing presence.

Another area where this Budget must tie into existing Government policy is with the ongoing Strategic Defence Review. The value of the policy decisions made and future direction set in the Strategic Defence Review can only be realised with adequate and clear resourcing decisions at this Budget and indeed in next year’s Spending Review.

Exports in defence and security are a vital part of both the UK’s economic growth, earning £20bn for the UK in 2023, but also a significant part of the UK’s global influence. Enhanced resourcing and funding for the Departments and agencies involved in export support, licensing, and promotion of the UK’s defence and security industries is a choice that will pay back well politically, economically, and for our collective security.

The space sector remains a global hub for innovation and rapid growth as the world above our skies becomes a vital part of our daily lives. If we want to take our place leading the world in this growing sector, the UK must take a strategic stance in the global space market by committing to increased investments in civil and military space activities.

We do not deny that investment in our sectors has an up-front cost, but it also cannot be denied that the UK’s aerospace, defence, security, and space sectors will be vital in effectively delivering the technology, skills, and export-led growth that we need to secure our domestic, global, and future advantage.