UK Defence and security marketplace

Homeland October 10, 2025

The UK government has announced the largest sustained increase in defence spending since the Cold War, with a commitment to raise spending to 2.5% of GDP from April 2027

The 𝗨𝗞 𝗠𝗶𝗻𝗶𝘀𝘁𝗿𝘆 𝗼𝗳 𝗗𝗲𝗳𝗲𝗻𝗰𝗲 (MOD) has published new figures detailing the composition and scope of departmental expenditure for 2024/25, including insight into the wider economic impact of defence spending.

In its latest explainer, our data partner DCI, considers what these statistics reveal about the future of the UK defence and security marketplace. With the top 10 suppliers accounting for over 39% of total MOD procurement spend – led by BAE Systems, Babcock and Rolls-Royce – we ask: 𝗵𝗼𝘄 𝗰𝗮𝗻 𝘁𝗵𝗲 𝘄𝗶𝗱𝗲𝗿 𝘀𝘂𝗽𝗽𝗹𝘆 𝗰𝗵𝗮𝗶𝗻 𝗽𝗼𝘀𝗶𝘁𝗶𝗼𝗻 𝗶𝘁𝘀𝗲𝗹𝗳 𝘁𝗼 𝘄𝗶𝗻 𝗰𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝘀 𝘄𝗶𝘁𝗵 𝘁𝗵𝗲 𝗠𝗢𝗗 𝗮𝗻𝗱 𝗶𝘁𝘀 𝗽𝗿𝗶𝗺𝗲 𝗰𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝗼𝗿𝘀?

Key Statistics at a Glance
£40.6Bn: MOD Core Department Payments
Paid by the MOD Core Department to UK and foreign-owned organisations in 2024/25 (excluding Foreign Military Sales). This represents a £3Bn increase on 2023/24, equivalent to a 3.8% real terms rise after adjusting for inflation.

45% Non-Competitive Sourcing
The proportion of MOD Core Department payments made through non-competitive sourcing in 2024/25 (excluding Foreign Military Sales). Up from 44% in 2023/24, this makes non-competitive contracting the predominant in-year sourcing method.

£20.9Bn New Contracts Value
Total value of new contracts placed in 2024/25, marking a £4.7Bn increase from the previous year.

49% New Contract Sourcing
The share of new contracts awarded through non-competitive sourcing in 2024/25, up from 45% in 2023/24. This is the highest level of single sourcing since 2015/16, making it the dominant procurement route for new awards.

The Top 10 Defence & Security Suppliers for 2024/25
Below are the top 10 private sector holding companies paid £50 million or more by the MOD Core Department, UKHO and Dstl in 2024/25:
BAE Systems PLC
Babcock International
Rolls-Royce Holdings PLC
QinetiQ Group PLC
Leonardo SpA
Airbus Group SE
Thales
Leidos Holdings Inc.
Serco Group PLC
The Boeing Company

In 2024/25, over 39% of total MOD procurement expenditure was concentrated among these ten suppliers, unchanged from the previous year in both share and composition. Spending ranged from 6.3% with BAE Systems PLC to 1.2% with Boeing.

Airbus and Boeing saw significant reductions in MOD expenditure, down £165M and £68M respectively compared to 2023/24. Spending with both firms has declined each year since 2021/22.

The fall in MOD spend with Airbus reflects the transition of satellite communications support for Skynet to Babcock in 2024/25.

Reduced expenditure with Boeing was primarily due to the winding down of acquisition spending on the E-7 Wedgetail aircraft and associated infrastructure. Once operational, the RAF’s new Airborne Early Warning and Control aircraft will be operated by 8 Squadron at RAF Lossiemouth.

The SME Perspective for 2024/25
In 2024/25, the MOD Core Department awarded 560 new contracts to Small and Medium-sized Enterprises (SMEs), with a total value of £941M – a decrease of 10 contracts and £213M compared with 2023/24, though still signalling substantial opportunity across the supply chain.

The 18% decrease in the total value of new SME contracts from 2023/24 to 2024/25 reflects a shift toward smaller-value awards, even as overall contract numbers remained broadly stable.

Despite this decrease, the reprioritisation of UK defence and security is likely to have a positive impact on SME engagement in 2025/26.

To find out more detail and how you can make the most of the opporutnities within the defence supply chain, book your free trial with DCI.