What impact will Brexit have on the Defence industry?

At 11am on the 16th March 2017, The Queen officially signed the Brexit Bill into law, clearing the pathway for our Prime Minister Theresa May to trigger Article 50 and initiate proceedings for Britain’s official exit from the European Union.


Therese May now has the legal authority to activate Article 50 at a time of her choosing, and it is expected she will notify the EU no later than the 28th of this month.

Since the 23rd of June 2016 when the nation’s divided votes were tallied, the Defence Industry entered into unstable territory. The UK’s decision to leave the EU raises important questions for defence and security worldwide. These questions have provoked deep uncertainty and speculation at a time when Europe and the UK already find themselves in a challenging defence landscape; the ever increasing threat of terrorism, a resurgent Russia, the migrant crisis, a volatile Middle East etc.

So, with Brexit proceedings imminent, what does this mean for the industry?

  • Defence spending – The weakened pound paves problems for the already ambitious defence spending plans. Although UK Defence firms are not expected to endure major financial losses, due to EU sales accounting for only 4% of turnover, Brexit does however raise questions about the UK’s influence over the EU defence industry and membership of the European Defence Agency in general. The National Audit Office has warned that the UK Ministry of Defence faces a £6bn hole in its spending plans—on top of the £21bn of upcoming military spending that must be paid for with the weakened pound.
  • Innovation – The EU is planning to invest hundreds of millions of Euros in defence R&D, and in the past the UK has benefitted from 1/5th of all EU research grants. With Britain leaving the EU, we will have limite access to EU funds for research, and therefore it is expected our rate of innovation will be stunted.
  • International sanctions – The UK has a strong hand in supporting international sanctions within the EU. Brexit is likely to weaken the sanctions regime and strengthen the position of member states that support the relaxation of sanctions for political or economic ends.
  • Scotland – 63% of Scotland voted to remain in the EU. Furious that the UK by sheer size had made their vote redundant, the Scottish independence debate was reignited. Scottish independence could pose practical, financial and political challenges in the defence industry – especially given the UK nuclear force is based in Scotland.
  • Sharing information – The EU and UK will need to find a way to ‘co-parent’, since they both currently benefit from information sharing and use the same bodies, such as Europol and the European Arrest Warrant.
  • Weakened forces –  A lot rides on the handling of the Brexit negotiations themselves. Both sides risk becoming weaker and less secure is the sensitive talks are handled in the wrong way, essentially leading to a messy divorce.

These are just some of the more obvious implications and uncertainties, there are a myriad of other important technical issues that will have to be resolved during and after Brexit negotiations.

Get in touch below, and I’ll send you our full report on:

‘Brexit Impact in Medium to Long Term due to Reduced Collaboration and Re-assessment of Strategic goals’


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