When the government released its Defence Industrial Strategy, 'Making Defence an Engine for Growth', earlier in September 2025, the paper laid out a 'roadmap' for using defence spending, not just as a matter of national security, but as a source of economic opportunity, too.
With the announcement that spending will increase, the Ministry of Defence set out that it aims to spend 2.6 per cent of the UK's GDP by 2027, with the ambition to reach 3 per cent in the next parliament, with 5 per cent of GDP being put towards national security by 2035.
It also stated that there will be a 'stronger focus on innovation and research and development (R&D), especially technologies that have both military and civilian applications, such as AI.
Finance experts say that the Defence Industrial Strategy represents a 'step change' in how government sees defence spending – not solely for readiness or capability but as a 'lever for regional economic growth'.
Graham Charlton, tax partner at Bishop Fleming, an accountancy and tax firm with offices in Cheltenham and across the south west, says that, for businesses in Gloucestershire in particular, this brings possibilities, with firms able to position themselves to benefit from not only R&D funding but expansion and recruitment drives.
Graham said: 'Gloucestershire already has several strengths that mean the region could punch above its weight under the new strategy.
'There is a growing aerospace and space cluster around Cheltenham and Gloucester, with firms and suppliers whose capabilities overlap with defence and dual-use technologies.
'There are strong academic and research institutions in the region, providing potential for innovation and the region isn’t far from existing defence supply chains, so it could serve as a competitive location for components, support services, testing, maintenance or assembly.'
With Gloucestershire well-known for its strengths and skilled workforce in cyber security but also engineering, manufacturing and IT, businesses should start to prepare themselves for accessing MOD procurement pipelines and meeting quality, security and regulatory requirements.
Graham continued: 'It is a good time to review your existing capabilities. Audit what you already do (manufacturing, engineering, software, sensors, logistics, etc) and see where those map to AI, cyber, space, etc, identifying how you might adapt or upgrade to meet MOD requirements.
'There is also an opportunity to engage with local networks and create partnerships with local universities, research centres, trade associations and innovation hubs to access collaborative R&D.'
Bishop Fleming also advise that now is the time to provide any skills and training that may need to be put in place, potentially through apprenticeships and college courses.
For Gloucestershire businesses, the incoming strategy offers real opportunities in innovation, exports, skills development and supply chain contracts.
Bishop Fleming add that the 'key will be to move proactively – assess capabilities, invest where needed, partner up and stay vigilant to new contracts and funding routes.'
'Those who move early are likely to gain a competitive head-start, as defence becomes a more dynamic engine for growth across the UK.'
If you would like to discuss how your business could take advantage of these defence spending changes and find out if you might qualify for R&D funding, speak to an advisor at Bishop Fleming on 0333 321 9000 or visit bishopfleming.co.uk.
