Will Ashford-Brown, from the strategic insights team of financial services provider Heligan Group, argues that with increasing geopolitical threats come opportunities for the Midlands which could ultimately boost economic growth for the region.
In a world reshaped by geopolitical fault lines, the defence industry is no longer a sideshow, it’s centre stage. From the Russia-Ukraine conflict, to rising tensions in the INDOPAC, and novel threats from cyber, space, and hybrid warfare, the West is confronting more complex, unpredictable risks.
The UK is increasing defence spending, rethinking supply chains, and pushing for sovereign capabilities. In the view of Heligan, what was once a matter of deterrence is now also one of critical industrial and economic strategy.
The Strategic Defence Review 2025 (SDR) commits to raise defence spending to 2.5% of GDP by 2027, up from 2.3% today, with the lofty ambition to reach spending of 5% of GDP on national security by 2035. This coupled with major industrial capacity increases, including six new munitions factories, continuous submarine production, and a new defence innovation fund of £400 million per annum to invest in UK companies, marks this SDR as unusual.
These are not modest tweaks – they signal a structural shift where procurement, supply chain security, and innovation are elevated to strategic priorities.
If the SDR provides the strategic intent, the Defence Industrial Strategy (DIS) provides the instructions for how we’re going to do it. It’s billed as a plan to make defence ‘an engine for growth, backing British jobs, British industry and British innovation’.
All good stuff, and it has teeth in the form of real funding too. There is provision for £250 million of investment in defence growth deals, targeted at regions across the UK to boost jobs, industry, and innovation – and yes, this includes the Midlands. There is also a landmark defence skills plan including the establishment of five new defence technical excellence colleges and £182 million for training programmes to build a pipeline of skilled workers.
These are accompanied by reforms in procurement and the prioritisation innovation, especially in dual‑use tech such as AI, cyber, and uncrewed systems. Estimates suggest that the increased spending could create up to 50,000 new jobs by 2035.
The Midlands is uniquely positioned to capitalise on the opportunities unlocked by the UK’s renewed focus on defence industrial growth. With its long-standing strengths in advanced manufacturing, aerospace and precision engineering, the region already boasts an industrial foundation that aligns perfectly with the priorities set out in the SDR and DIS.
Local firms are now ideally placed to diversify into defence programmes, from supplying critical components for submarines and munitions, to contributing to the fast-growing fields of drones and autonomous systems, where lightweight materials and cutting-edge engineering are vital.
The region’s skills ecosystem is also central to this opportunity. The launch of the new TECs provides schools and universities in the Midlands with a direct pathway into the defence skills pipeline. Apprenticeships in engineering, cybersecurity, AI, and advanced manufacturing will play a key role in shaping the workforce of the future in our area.
For the local economy, the DIS’s regional defence growth deals could unlock thousands of high-value jobs across supply chains, R&D, and production. Cities such as Birmingham, Coventry, and Wolverhampton – already home to thriving technology clusters, manufacturing hubs, and world-class universities – stand to gain significantly as defence-related investment fuels innovation and creates new avenues for economic growth.
Crucially, this opportunity dovetails with the Government’s broader levelling-up agenda. The DIS explicitly ties defence investment to regional development and for the West Midlands, this represents a once-in-a-generation chance to attract inward investment and secure its position as a leader in the UK’s evolving defence economy. To make the most of it, local councils, business leaders, and academic institutions will need to work collaboratively.
However, the path forward is not without its challenges. Procurement reform remains complex, scaling up supply chains and production facilities takes time, and developing the right skills programmes is no small feat. Competition between regions will be intense as local authorities across the UK vie for funding and contracts, all whilst fiscal pressures remain significant.
For Heligan though, the signal is unambiguous – government policy is now firmly aligned behind defence innovation, supply chain resilience, and the development of high-value skills. SMEs specialising in AI, cybersecurity, materials science, uncrewed systems, and advanced engineering are particularly well placed to benefit. The Midlands has the assets, the talent, and the industrial base to lead in this space, but it will require early engagement from business and investors alike to turn ambition into reality.
The SDR and DIS mark a turning point. Defence is being reframed not just as the cost of safety, but as the cornerstone of economic growth, innovation, and regional opportunity. For the Midlands, the chance is tangible: jobs, infrastructure, and industrial leadership – all in reach if local government, education providers, industry, and investors act together.
Now is the moment to lean into defence. The threats are evolving, but so are the opportunities.
