Annex K: United Kingdom

Annex to Report: Vision on Defence-Related Skills for Europe Today and Tomorrow

Published in: European Commission (2019)

Posted on RAND.org on October 30, 2019

by Julia Muravska, Alice Lynch, Jacopo Bellasio, Anna Knack, Katerina Galai, Marta Kepe, Antonia Ward, Arya Sofia Meranto, Davide Maistro, Martin Hansen

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The UK defence sector, one of the largest in Europe both in terms of active companies and number of employees, directly employs over 146,000 people (including 4,300 apprentices) with a further 120,000 employed through the supply chain. Holding 17 per cent of the global aerospace market, the UK's is the largest aerospace industry in Europe and, globally, is second only to that of the US. The UK has a large defence industrial base in the European context, and it continues to maintain its industrial capabilities in areas such as military helicopters, fixed wing aircraft, naval shipbuilding, nuclear submarines and armoured vehicles.

The UK defence budget totalled €41.12 billion for the fiscal year 2018–19. Between 2008 and 2016, UK defence spending as a percentage of GDP steadily decreased, largely due to tighter budgets resulting from the global financial crisis. Between 2002 and 2009, defence spending remained consistently at about 2.65–2.70 per cent of GDP. Following the global financial crisis, defence spending began to steadily decline, but it is worth noting that despite this decline the UK remained one of the highest defence spenders in Europe in terms of GDP (currently estimated at 2.1 per cent), coming in third after Estonia and Greece. Since 2017 the UK's defence budget has once again begun to increase; up to fiscal year 2020–21, defence spending is planned to increase by an annual average of 1.3 per cent in real terms. By 2020–21, the defence budget is planned to be €2.14 billion greater than in 2016–17. In 2018, the highest share (39 per cent) of the UK's defence spending was on 'other' costs. This includes operations and maintenance expenditure and R&D investment. The remaining expenditure was accounted for by spending on personnel (37 per cent), equipment (22 percent) and infrastructure (2 per cent). The UK is the world's second-largest defence exporter, and holds an estimated 12 per cent share of the global export market. The country's defence exports were valued at €10.12 billion in 2017, representing a 53 per cent increase from the previous year. This growth was largely driven by sales in defence aerospace, such as a number of F-35 sales to the USA and Rolls Royce engines for Germany's Multi Role Tanker Transport (MRTT) aircraft.

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