{"id":519006,"date":"2025-05-02T10:57:25","date_gmt":"2025-05-02T09:57:25","guid":{"rendered":"https:\/\/www.constructionnews.co.uk\/?p=519006"},"modified":"2025-05-02T10:57:25","modified_gmt":"2025-05-02T09:57:25","slug":"the-defence-boom-a-lifeline-for-uk-construction","status":"publish","type":"post","link":"https:\/\/www.constructionnews.co.uk\/sections\/long-reads\/opinion\/the-defence-boom-a-lifeline-for-uk-construction-02-05-2025\/","title":{"rendered":"The defence boom: a lifeline for UK construction?"},"content":{"rendered":"

Mark Leeson is operations director at consultancy McBains<\/i><\/b><\/p>\n

Will the government\u2019s recent <\/span>defence-spending boost<\/span><\/a> provide ammunition to help spark construction\u2019s recovery?<\/span><\/p>\n

To say recent construction industry forecasts have been downbeat would be an understatement, what with consultancy Arcadis\u2019 market-view report predicting a painfully slow revival and market analysts S&P Global\u2019s index warning of steep declines in housing and civil engineering.<\/span><\/p>\n

So, with fears that investment is in retreat, could the prime minister\u2019s recent pledge to increase defence spending to 2.5 per cent of GDP \u2013 bolstered by an <\/span>additional \u00a32bn<\/span><\/a> in the chancellor\u2019s spring statement \u2013 help trigger growth?<\/span><\/p>\n

\u201cThe opportunity is there for UK construction companies to export their considerable expertise to NATO countries\u201d<\/span><\/p><\/blockquote>\n

To put it into context, the increase \u2013 with an ambition to reach 3 per cent of GDP during the next parliament \u2013 represents the biggest investment in defence spending since the Cold War. <\/span><\/p>\n

We are in an era of intensifying geopolitical competition and conflict that is not going to end any time soon. Indeed, defence funding could increase further: as former chancellor Jeremy Hunt has said, if president Trump pulls the plug on US backing for NATO, then we could be talking about committing 6-10 per cent of GDP.<\/span><\/p>\n

Construction needs to recognise which way the wind is blowing. Defence is a growth sector. More than two-thirds (68 per cent) of defence spending goes outside London and the South East, so the whole UK could benefit too.<\/span><\/p>\n

UK-wide boost<\/span><\/h3>\n

Big hitters in the construction industry with defence expertise \u2013 the likes of BAE Systems, Kier Group and others \u2013 are set to reap the rewards, but about 12,000 other firms in UK defence-related manufacturing industries could also pick up contracts, according to lobby group Make UK.<\/span><\/p>\n

More opportunities will arise, especially as \u2013 through the forthcoming <\/span>Defence Industrial Strategy<\/span><\/a>\u00a0\u2013 the investment will drive innovation in developing technologies such as AI, quantum and space capability. The Ministry of Defence may also need to build and maintain a wide range of infrastructure, including new facilities for storing equipment and housing personnel.<\/span><\/p>\n

Secondly, Trump\u2019s sledgehammer tactic in calling for European countries to pay more towards defence could have a knock-on benefit for UK expertise. In 2014, prior to Trump\u2019s first presidency, only three of 32 NATO member states (the US, UK and Greece) were spending more than 2 per cent of GDP on defence. While this rose to 23 after his first term, it means capability and experience \u2013 including the construction of defence-industry facilities \u2013 remains in short supply. The opportunity is there for UK construction companies to export their considerable expertise to NATO countries.<\/span><\/p>\n

Barriers still exist, however, such as skill shortages. According to manufacturing trade body Make UK, apprenticeship starts in defence-related industries have dropped 40 per cent since the apprenticeship levy scheme came into effect in 2017. As we know, construction is facing a similar problem, with the latest figures showing that apprenticeship starts in the industry fell by 1.4 per cent in 2023\/24. This followed a 5 per cent drop the year before.\u00a0<\/span><\/p>\n

Both the defence and construction industries will be watching to see what impact the <\/span>government\u2019s skills training programme<\/span><\/a> will have. My hope is that innovation will be a driver in overcoming skill shortages, with the additional investment flowing into R&D meaning we find better ways of upskilling the workforce.\u00a0<\/span><\/p>\n

Despite concerns over skill gaps, the prospects for construction as a result of the spending boost are promising. Its recovery will take more than just an increase in defence spending, but at a time of long-term uncertainty in many work sectors, those companies that can compete in defence-related areas can look forward with confidence.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Mark Leeson is operations director at consultancy McBains Will the government\u2019s recent defence-spending boost provide ammunition to help spark construction\u2019s recovery? To say recent construction industry forecasts have been downbeat would be an understatement, what with consultancy Arcadis\u2019 market-view report predicting a painfully slow revival and market analysts S&P Global\u2019s index warning of steep declines …<\/p>\n","protected":false},"author":1,"featured_media":519000,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false},"categories":[565,567,575,57171],"tags":[],"yoast_head":"\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\t\n\t\n\t\n