- The new export facility is one of the elements of outgoing Prime Minister Keir Starmer’s broader defence plan
UK Export Finance (UKEF) has launched a £50bn Defence Export Fund, taking its total lending and guarantee capacity to £130bn, as part of the government’s efforts to increase defence spending.
The new fund, intended to back large-scale UK defence exports, sits on top of UKEF’s existing £80bn limit, marking the largest expansion to the export credit agency’s financial support in its 100-year history, it said.
Support will be channelled either through UKEF guaranteeing bank loans to British defence exporters fulfilling contracts, or through financing extended to overseas buyers of UK defence products.
The fund is open to defence companies of all sizes, whether established exporters or businesses looking to break into international markets, UKEF said.
The move is part of the UK government’s wider defence investment plan, announced today by Prime Minister Keir Starmer after weeks of tense negotiations that saw the departure of former defence minister John Healey earlier this month.
Starmer described UKEF’s export facility as a “once-in-a-generation boost” to help British defence firms compete internationally while creating jobs and opportunity around the country.
Tim Reid, UKEF’s chief executive, said: “Security is a strategic priority for governments worldwide, and the UK’s defence sector offers pioneering capabilities that allies are actively seeking.
“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 cited recent defence deals as evidence of “significant” demand growth, including support for air defence systems to Poland and Ukraine and submarine rescue vehicles to Indonesia.
The agency said defence transactions above £5bn are now “commonplace”, with UKEF supporting £10bn of such deals in the 2024-25 financial year alone.
Kate Shoesmith, director of policy at the British Chambers of Commerce, said: “The release of this spending plan is long overdue. National security and economic security must go hand in hand. Boosting defence manufacturing and exports have to be key goals for the next decade and beyond.”
“The prize here is significant,” she added. “In 2023, UK defence exports surged by 29% on the previous year, and 49% of these overseas sales went to the EU.
“Raising these metrics further would give the UK economy a welcome boost, so the new Defence Exports Facility, underpinned by a £50bn uplift in UK Export Finance [capacity], should be applauded.”
The new defence fund follows a series of expansions to UKEF’s firepower over the past year, including a boost from the Treasury last June that increased UKEF’s maximum commitment limit from £60bn to £80bn as part of the government’s trade strategy.
Through the same package, UKEF received a £3bn increase to its direct lending facility, taking total direct lending capacity to £13bn, with at least £3bn of that earmarked for defence exports.
Shoesmith also said increasing the number of SMEs that can “competitively bid for contracts through simplified procurement rules and better supply chain connectivity” would help “maximise the economic benefits” of the recent announcements.
