Business as usual is not an option. The Strategic Defence Review 2025 marks a fundamental pivot in how the UK approaches defence and security.
As Co-Chair of UDSS, I believe this is a moment of profound opportunity for commercial companies, investors, and innovators. Defence is now firmly at the centre of the UK’s national and economic strategy – no longer business as usual, but a time for transformative collaboration.
The Review makes it clear: our security environment is more demanding than at any time since the Cold War. In response, the government has committed to the largest sustained increase in defence spending for a generation. This creates significant opportunities for the private sector – from technology start-ups and scale-ups to our most established industrial players.
The MOD is clear that innovation must be at the heart of this transformation. It will embrace faster innovation cycles and reform procurement processes to cut timelines dramatically – ensuring that novel ideas and dual-use technologies can find rapid pathways into the hands of the warfighter. With a dedicated £400 million annual budget for UK Defence Innovation and a new Defence Research and Evaluation organisation, the stage is set for commercial solutions to be adopted at wartime pace.
Defence will also leverage private finance, with a new Defence Investors’ Advisory Group and targeted strategies to unlock investment. Investors and financial institutions will be able to support the growth of UK-based technology leaders and dual-use innovators – companies that will play a pivotal role in modernising our armed forces and in driving economic growth across the country.
Our new partnership with industry, supported by the National Armaments Director, will overhaul procurement from top to bottom: engaging early, rewarding productivity and risk-taking, and removing barriers that have held back smaller firms and dynamic innovators. For those of us in the defence ecosystem – whether in business, finance, or technology – this is a once-in-a-generation opportunity to contribute directly to our national security, while also building a more resilient, competitive, and export-ready industrial base.
At UDSS, with the expertise of our members who contributed to the report, we stand ready to support companies of all sizes in navigating these changes, forging productive partnerships, and bringing forward the best of British innovation and industrial capability. The UK’s future security and economic strength depend on it.
- Peter Hewitt, Co-Chair, Universal Defence and Security Solutions
A New Era for Defence and Industry
“Business as usual is not an option.” The UK’s Strategic Defence Review 2025 (SDR) signals the largest sustained increase in defence spending since the Cold War. This radical shift demands a reimagined relationship between the Ministry of Defence (MOD), commercial defence companies, start-ups, SMEs, and investors. The SDR’s core message is clear: the threats we face require a step-change in how we develop, fund, and deliver defence capability – with innovation and collaboration at its heart.
A Transformational Opportunity for Business and Industry
Defence is now the fundamental organising principle of government. For commercial companies, the SDR’s call for transformation translates into direct opportunities:
- A decade of sustained investment will drive demand for cutting-edge technology, dual-use solutions, and industrial scale-up.
- A new partnership model opens the door for early and ongoing collaboration across the supply chain – from start-ups to primes.
- A shift towards outcomes-based partnerships enables industry to move from supplying to actively shaping solutions.
Breaking Down Barriers for Industry and Investors
Traditional MOD procurement cycles stifled innovation:
- 6.5 years on average for contracts over £20m.
- Excessive regulatory burden on SMEs and innovators.
The SDR dismantles these obstacles with radical procurement reform:
- Major modular platforms: contracting within two years
- Spiral and modular upgrades: contracting within one year
- Rapid commercial exploitation: contracting within three months
- A commitment to spend at least 10% of MOD’s equipment procurement budget on novel technologies annually.
- A focus on rewarding productivity, risk-taking, and dual-use innovation.
Innovation: At the Core of Defence Transformation
The SDR establishes a dynamic innovation ecosystem:
UK Defence Innovation (UKDI):
- £400m ringfenced annual budget.
- Gateway for dual-use technologies and commercial spin-ins.
- Coordinates innovation hubs and challenges to drive rapid adoption.
Defence Research and Evaluation (DRE):
- Early-stage research and academia partnerships.
- Seeding science and technology excellence for future capability.
New Defence Investors’ Advisory Group:
- Venture capital, private equity, and private finance engagement.
- Private investment strategy for Defence by March 2026.
- Financial sector engagement to unlock new funding models and reduce barriers for innovators.
Economic Growth and Regional Impact
The SDR recognises Defence as an engine for national growth:
- Defence spending in 2023/24: £39bn with UK industry.
- Defence exports (2023): £14.5bn.
- Supports 440,000 UK jobs and 24,000 apprenticeships.
New initiatives include:
£6bn in munitions, including an ‘always on’ pipeline and at least six new factories.
Establishment of regional technology clusters, e.g.:
- Cyber in Manchester
- AI in the North East
- Marine autonomy in Plymouth
A package of support for industry (by April 2026) to:
- Halve the burden of Defence Standards.
- Reform IP handling, security clearance, and contract regulations.
- Provide access to data, testing, and export pathways.
Export-Driven Collaboration and International Partnerships
The SDR recommends:
- A new Defence Exports Office in the MOD to drive growth in exports and international collaboration.
- Exports mainstreamed into acquisition from the outset.
- A multilateral capability plan with NATO allies to ensure interoperability and create joint procurement opportunities.
- Strategic leadership by the National Armaments Director to ensure UK-based suppliers are prioritised.
Technology-Enabled Force Transformation
The SDR commits to a British Army 10X more lethal, blending:
- Conventional forces with drones, AI, and autonomy.
- Human-machine teaming, data flows, and machine-speed decision-making.
The MOD’s priorities include:
- Accelerating adoption of AI and autonomy across the Integrated Force.
- Launching the Defence Uncrewed Systems Centre by February 2026.
- Exploring novel directed energy weapons and advanced manufacturing.
Seizing the Opportunity: Key Takeaways for Industry
- Mainstream Innovation: Defence will pivot to wartime innovation pace, demanding faster adoption of commercial solutions.
- Be a First Customer: The MOD will use its market power to seed innovation, acting as a first customer to scale dual-use and defence-specific technologies.
- Unlock Private Finance: Defence’s new approach will enable investors to participate confidently in funding defence start-ups and scale-ups.
- Export Potential: By aligning early with MOD and NATO capability needs, UK companies can position themselves as preferred global suppliers.
Collaboration for National Security and Economic Growth
The Strategic Defence Review 2025 sets out a bold vision for UK defence and security – one that puts industry, innovation, and private investment at the heart of delivering cutting-edge capability. The UK’s defence ecosystem – from start-ups to primes, from venture capital to institutional investors – is now called upon to embrace this opportunity for transformation, growth, and global leadership.
As the UK embarks on this transformative era of defence and security, UDSS stands ready to help organisations of all sizes navigate the changes and seize the opportunities created by the Strategic Defence Review 2025. From start-ups to global primes, we offer deep practitioner-led expertise to help you understand and align with the SDR’s radical reforms: unlocking new pathways for procurement, embracing dual-use innovation, and accelerating your journey to market within a modernised and fast-paced defence ecosystem. Whether you’re looking to harness new investment models, bring novel technologies to the front line, or expand your export potential, UDSS will guide you through every stage of this new partnership with Defence—ensuring your business is not only ready to meet these challenges but thrives as an integral part of the UK’s national security and economic growth. Get in touch: info@universal-defence.com
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