Future of the UK Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

Table of Contents

1. Introduction 7

• 1.1. What is this Report About? 7
• 1.2. Definitions 7
• 1.3. Summary Methodology 9
• 1.4. About GlobalData 10

2. Executive Summary 11

3. Market Attractiveness and Emerging Opportunities 13

• 3.1. Current Market Scenario 14
  • 3.1.1. Military Fleet Size 14
  • 3.1.2. Procurement Programs 19
  • 3.1.3. Key Drivers and Challenges 21
• 3.2. Defense Market Size Historical and Forecast 23
  • 3.2.1. The UK’s defense budget (inclusive of Foreign economic aid, R&D Defense and Defense Network-enabled Capability [NEC]) is anticipated to increase at a CAGR of 4.33% 23
  • 3.2.2. The UK’s expenditure on defense functions (exclusive of foreign economic aid, R&D defense and defense NEC) is anticipated to increase at a CAGR of 3.39% over the forecast period 25
  • 3.2.3. Counter-terrorism activities, procurements, and peacekeeping operations are the primary factors driving defense expenditure 27
  • 3.2.4. Defense budget as a percentage of GDP is anticipated to decrease over the forecast period 28
• 3.3. Analysis of Defense Budget Allocation 30
  • 3.3.1. More than 90% of the UK’s defense budget is allocated for defense capabilities 30
  • 3.3.2. The allocations for peacekeeping operations and foreign military aid are anticipated to cumulatively value US$2.4 billion and US$2.8 billion respectively over the forecast period 32
  • 3.3.3. Expenditure on defense capability is expected to grow at a CAGR of 3.32% over the forecast period 34
  • 3.3.4. The allocation towards capital expenditure will remain constant 36
  • 3.3.5. Capital expenditure is anticipated to record CAGR of 5.19% over the forecast period 38
  • 3.3.6. Per capita defense expenditure to increase over the forecast period 40
• 3.4. Homeland Security Market Size and Forecast 41
  • 3.4.1. The Homeland Security market in UK is expected to grow at a CAGR of 1.73% over the forecast period 41
  • 3.4.2. Border security and cyber-security will be the key drivers for homeland security 43
  • 3.4.3. The UK is ‘highly affected’ by terrorist activities 44
  • 3.4.4. The UK faces a high risk of terrorist attack 45
  • 3.4.5. The UK faces a substantial threat from terrorist organizations 47
• 3.5. Benchmarking with Key Global Markets 48
  • 3.5.1. The UK ranks among major Global Defense Markets 48
  • 3.5.2. The UK is expected to be among the top 10 defense spending countries in the world 50
  • 3.5.3. The UK allocates a significant percentage of GDP towards defense 51
• 3.6. Market Opportunities: Key Trends and Growth Stimulators 52
  • 3.6.1. Top 10 Defense market sectors by value (US$ Million) - Projections over period 2018-2023 52

4. Defense Procurement Market Dynamics 53

• 4.1. Import Market Dynamics 54
  • 4.1.1. Defense imports are expected to remain consistent with the historic trends 54
  • 4.1.2. The US is the leading arms exporter to UK, a trend expected to continue in the coming years 55
  • 4.1.3. Aircraft, Missiles, and Engines account for more than three-quarters of UK arms imports 56
• 4.2. Export Market Dynamics 57
  • 4.2.1. UK Defense Exports are anticipated to increase over the historic period 57
  • 4.2.2. Saudi Arabia, Oman, and Indonesia are the main buyers of UK defense exports 58
  • 4.2.3. Aircraft make up the majority of the UK’s defense exports 59

5. Industry Dynamics 60

6. Market Entry Strategy 60

• 6.1. Market Regulation 60
  • 6.1.1. Offset policy discarded in order to maintain competitiveness of domestic suppliers 60
  • 6.1.2. The UK permits 100% FDI in its defense industry 60
  • 6.1.3. Government initiatives to boost the defense industry 61
• 6.2. Market Entry Route 61
  • 6.2.1. Budgeting Process 61
  • 6.2.2. Procurement Policy and Process 62
  • 6.2.3. Joint weapons development programs are a viable market entry opportunity 63
  • 6.2.4. Joint ventures open up new market entry strategy choices 64
  • 6.2.5. Forming subsidiaries in the UK and the acquisition of domestic companies provide good market entry opportunities 64
  • 6.2.6. Procurement Policy and Process 64

7. Competitive landscape and Strategic Insights 65

• 7.1. Competitive landscape Overview 65

8. Business Environment and Country Risk 67

• 8.1. Economic Performance 67
  • 8.1.1. Gross Domestic Product Per Capita 67
  • 8.1.2. Gross Domestic Product at Current Price US$ 68
  • 8.1.3. Exports of goods and services, current prices 69
  • 8.1.4. Imports of goods and services, current prices 70
  • 8.1.5. Gross National Disposable Income, current prices 71
  • 8.1.6. Local Currency Unit per US$, Period Average 72
  • 8.1.7. Market Capitalization of Listed Companies (US$ Billion) 73
  • 8.1.8. Market Capitalization of Listed Companies (% GDP) 74
  • 8.1.9. Government Cash Surplus/Deficit, as a Percentage of GDP (LCU) 75
  • 8.1.10. Goods Exports as % of GDP 76
  • 8.1.11. Goods Imports as % of GDP 77
  • 8.1.12. Services Imports as a % of GDP 78
  • 8.1.13. Services Exports as a % of GDP 79
  • 8.1.14. Foreign Direct Investment, BoP, Current Values in US$ Billion 80
  • 8.1.15. Net Foreign Direct Investment as a % of GDP 81
  • 8.1.16. Mining, Manufacturing, Utilities Output 82

9. Appendix 83

• 9.1. About GlobalData 83