The UK government has announced a £50 billion Defence Export Fund aimed at helping British defence companies secure overseas contracts, marking the largest expansion in the history of UK Export Finance (UKEF).
The new funding increases UKEF’s overall lending and guarantee capacity from £80 billion to £130 billion, with the additional £50 billion reserved exclusively for defence exports. Officials say the move is intended to strengthen the competitiveness of British defence manufacturers as global military spending reaches record levels.
The announcement comes as countries around the world continue to increase defence budgets in response to ongoing geopolitical tensions. According to the Stockholm International Peace Research Institute, global military expenditure reached a record $2.7 trillion in 2024, a 9.4% increase from the previous year and the sharpest annual rise since the end of the Cold War. The increase has been driven by the war in Ukraine, conflict in the Middle East and growing security concerns across several regions.
Under the new programme, UKEF will guarantee bank loans taken out by British defence exporters as they fulfil overseas contracts. The agency will also provide or support financing packages for foreign governments purchasing British-made defence equipment.
The government believes access to state-backed financing will make UK companies more competitive when bidding for major international defence contracts by allowing overseas buyers to secure favourable payment arrangements alongside the purchase of military equipment.
The Defence Export Fund will be available to companies of all sizes, including major defence manufacturers and small and medium-sized enterprises seeking to expand into international markets. UKEF has recently introduced additional financial products aimed at helping smaller exporters overcome barriers to entering overseas markets.
The agency has steadily expanded its involvement in defence exports in recent years. It has supported projects including air defence systems supplied to Poland and Ukraine, as well as submarine rescue vehicles provided to Indonesia. Officials say these deals have supported skilled employment across different parts of the United Kingdom.
According to government figures, UKEF backed £10 billion worth of defence business during the 2024-25 financial year. Defence transactions exceeding £5 billion have also become increasingly common, prompting the agency to increase its available financial capacity to meet growing demand.
The initiative forms part of the government’s wider strategy to strengthen the UK’s defence industry, expand domestic manufacturing and reduce reliance on imported military equipment. Ministers have also introduced measures to improve opportunities for smaller defence firms to compete for contracts awarded by the Ministry of Defence.
UKEF Chief Executive Tim Reid said the new fund reflects growing international demand for British defence technology.
“Security is a strategic priority for governments worldwide, and the UK’s defence sector offers pioneering capabilities that allies are actively seeking,” Reid said. “With billions of pounds available in new export financing, we are strengthening the sector’s global competitiveness while backing skilled British jobs and supporting long-term economic growth.”
UKEF has set a target of helping UK businesses secure more than £12.5 billion in new export contracts by 2029, with defence expected to account for a significant share of future growth.
