The UK Government’s pledge to boost defence spending is expected to bring new opportunities for Scottish small and medium-sized enterprises (SMEs), especially those working in high-tech and manufacturing. The increase, part of a wider plan to modernise the UK’s defence sector, is being seen as a major win for Scotland, which already punches above its weight in innovation, engineering, and skilled talent.
During a visit to JFD Global in Renfrew, Scottish Secretary Ian Murray highlighted the company’s advanced submersible technology and its role in supporting the Royal Navy. The visit coincided with the announcement that UK defence spending will rise to 2.5% of GDP by April 2027, with an aim to reach 3% in the longer term. A key part of this strategy is giving SMEs greater access to defence contracts and innovation funds.
“Scotland’s defence sector is among the best anywhere,” said Murray. “It supports our armed forces and fuels growth and good jobs across the country.”
The message is clear: defence isn’t just about national security—it’s now central to the UK’s economic strategy. The Ministry of Defence already spends over £2.14 billion a year in Scotland, including £32 million with SMEs. The new funding commitment is expected to amplify that impact, creating a broader base of opportunity for Scottish businesses.
At present, just 4% of UK defence spending reaches SMEs. To change that, the government is launching a dedicated hub to help smaller businesses navigate procurement and join the defence supply chain. By June, direct spending targets will be introduced, aimed at making defence contracts more accessible to smaller, often family-run firms.
The implications for Scotland are significant. Defence already supports more than 11,000 jobs here, and the country is well-positioned to scale that number. With strengths in advanced manufacturing, engineering, and research, Scotland is poised to play a bigger role in building a modern, responsive defence economy.
Prime Minister Keir Starmer framed the move as part of a larger economic vision: “The UK’s defence industry is a source of national pride. This investment doesn’t just protect the country—it grows paycheques and strengthens the economy.”
Crucially, almost 70% of UK defence spending happens outside London and the South East. That means more opportunities for Scottish firms—from Inverness to the Central Belt—to tap into this growing market.
Defence Secretary John Healey stressed the importance of inclusion: “Too often, small businesses have been locked out of the defence space. This strategy changes that—they’re now at the heart of our plans.”
Whether it’s AI, advanced data systems, cybersecurity, or next-gen engineering, Scottish SMEs are well placed to lead. The increased investment gives them the runway to scale up, take on bigger contracts, and export their expertise.
The defence boost also ties into the UK Government’s wider “Plan for Change,” which connects economic resilience with innovation and global competitiveness. Scotland’s thriving tech and industrial base aligns well with that vision.
This move also feeds directly into the Brand Scotland campaign, which aims to promote Scottish innovation globally. With better access to funding, training, and procurement pipelines, Scottish defence SMEs can take their place on the international stage—showcasing what the country can offer in areas like secure communications, aerospace, and marine engineering.
As global threats evolve, the demand for agile, high-tech defence solutions is only increasing. For Scotland, that’s both a challenge and an opportunity—to not just contribute to national security, but to help shape its future.
From Renfrew’s submersible pioneers to the shipyards of Rosyth, from Glasgow’s tech labs to Inverness’s precision engineering shops, Scottish businesses have the talent and tools to lead. What they’ve needed is access and support. With this new strategy, they now have both.
Scotland’s SMEs are ready to deliver—not just for defence, but for a more resilient, high-growth economy.
