UK defence spending creates significant regional economic opportunities but capitalising on them demands committed procurement contracts, co-ordinated skills pipelines and genuine placemaking - connecting defence assets to local communities, infrastructure and supply chains.

A UKREiiF panel session, ‘Sector insights: The art of defence’, explored what’s holding progress back and what it will take to build a defence sector capable of meeting the challenges ahead.

The session was chaired by Andrew Fotherby of Tetra Tech and featured panellists from Huntingdonshire District Council, Airbus Defence and Space UK, Great Southwest, Newcastle City Council and BAE Systems.

How defence investment is creating regional economic opportunities

The panel was unambiguous about the strategic importance of defence investment – if we want to keep the life we have, we need to defend ourselves. Working within NATO structures, it was noted, provides a powerful halo effect for exports. Using national capital to solve sovereign needs while simultaneously opening international markets is precisely why the defence sector matters so much to the UK economy.

For local authorities, the challenge is not simply attracting investment but rebuilding the relationship between defence assets and surrounding communities. In Huntingdonshire, the council worked with colleagues at nearby RAF Wyton, in Cambridgeshire, to establish a shared vision. 

This culminated in Project Fairfax, an ambition launched last year to create a campus bringing together technology companies, startups and academia around military technology. The geospatial technology market, projected to reach $62.6bn by 2030, was identified as a priority sector for this kind of focused investment. The panel emphasised that unlocking this opportunity requires the right infrastructure and a concerted effort at placemaking to explain to communities how defence connects to their lives and futures.

That sense of community connection was a recurring theme. In South West England, Leonardo Helicopters’ Yeovil plant illustrates how integral defence manufacturing is to a regional economy, employing 3,300 people directly with thousands more employed across supply chains. When communities understand this connection, a genuine pride emerges and storytelling becomes an important tool for inspiring the next generation.

North East England offered a different but equally compelling example. The region’s heritage in shipbuilding and heavy industry has evolved into a modern cluster in offshore and subsea technology, attracting significant investment including 500 jobs created by Leonardo at university-led regeneration site Newcastle Helix in 2023, and further commitments from Airbus and Lockheed Martin in the city.

The Northeast Regional Defence and Security Cluster brings together skills providers and industry, as well as working to improve SME access to Ministry of Defence (MoD) procurement contracts. The panel noted, however, that delays in MoD procurement and the Defence Investment Plan are already having a tangible impact on investment projects.

Building the defence workforce: Skills pipelines and sector competition

If market opportunity represents one half of the equation, skills represent the other, and the panel was frank about the scale of the challenge.

Airbus has led by example, creating the first space engineering degree apprenticeship programme, which it projects will build an early careers pipeline of 100 people, double the national average. Space alone is projected to become a trillion-pound industry, and the engineers needed must start training now. The difficulty is that defence competes for the same talent pool as rail, water and nuclear, and without a co-ordinated national response, regions and sectors end up competing against one another.

Making defence careers visible to young people was highlighted as a priority. One panellist described the ambition to build a centre of excellence in space technology featuring a model rocket so that an eight-year-old visiting with their school could imagine a future in the sector. Similar thinking is being applied through an ocean camp initiative for offshore careers. The message to local authorities was direct: making it as easy as possible for defence companies to build the facilities they need is a competitive necessity.

The Great South West public-private partnership published a regional defence prospectus last year that found the defence sector generates £2.8bn in GVA and supports over 61,000 jobs. However, it also reported on the pressures created by major projects – Hinkley Point C and a gigafactory developed with Jaguar Land Rover, both in Somerset, have drawn heavily on the regional labour pool.

In response, it has created an industrial workforce plan that aims to map the curve of large schemes over time and create a qualifications framework allowing skilled workers to move between sectors as demand shifts, turning potential competition into genuine collaboration.

BAE Systems reinforced this point from an industry perspective. The focus, it was argued, should not be on any single large entity but on the broader ecosystem that underpins a strong UK defence industry, a point reflected in the company's £25m investment in a new facility in Sheffield last year. 

What needs to change?

When the panel was asked what they would change, two themes stood out clearly.

On procurement, the message was direct: demand signals are not enough. The UK needs to commit to actual contracts and get money spent domestically. Until that happens, the ability of industry to plan, invest and build the workforce it needs will remain constrained.

On planning and infrastructure, the panel pointed to biodiversity net gain requirements as a genuine challenge on certain defence-related sites, and called for greater investment in the roads, rail and power grid connections needed to make sites ready for development at pace. Speed matters, and the regulatory and infrastructure environment must be capable of keeping up.

Our view

The panel at UKREiiF 2026 made a compelling case that defence is no longer a niche sector conversation, but sits at the heart of some of the most significant economic opportunities available to UK regions right now. From geospatial technology in Huntingdonshire to subsea clusters in Newcastle and aerospace in South West England, the potential is real and the momentum is building.

What struck us most was the emphasis on place, community and collaboration. The most successful examples were not simply about attracting large contractors, they were about rebuilding relationships between the sector and local communities, investing in skills pipelines, and creating conditions in which businesses of all sizes can access opportunities. 

For local authorities, developers and investors, the message is clear: early engagement, a joined-up approach to skills, and the right enabling infrastructure are the foundations on which successful defence-led growth will be built.

We work with local authorities, developers, infrastructure investors and industrial occupiers across a wide range of complex projects. If you would like to discuss how the themes raised may be relevant to your work, please get in touch.