Please note: This blog was authored by Fred Clear, a Dods Political Intelligence intern, as part of a summer internship programme. As part of our commitment to supporting early career development, we encourage interns to develop their own perspectives and insights, which may not be reflective of Dods Political Intelligence’s position.
On 8 May 2025, the UK Government committed to delivering a defence dividend: a strategy to use increased defence spending to both modernise the armed forces and drive wider national benefit. The promise was clear: stronger national security, revitalised industrial capacity and economic opportunity for businesses across the country.
Has the UK Delivered on Its Defence Dividend?
On 24 June 2025, the UK Government announced a strategic shift in its nuclear posture by ordering at least twelve F‑35A jet aircraft, joining NATO’s Dual‑Capable Aircraft nuclear mission. This marks the first time since 1998 that the RAF will operate air‑delivered nuclear weapons, complementing the existing Trident submarine deterrent.
Why the F‑35A Order Matters
Unlike the RAF’s existing F‑35Bs, the F‑35A variant can carry American B61‑12 gravity bombs, enabling the UK to participate directly in NATO’s nuclear sharing. Prime Minister Keir Starmer notes…
“[The] F35 dual-capable aircraft will herald a new era for our world-leading Royal Air Force and deter hostile threats that threaten the UK and our Allies”.
The F‑35 is already used by many NATO members, including Italy, Denmark and Norway. Furthermore, NATO F-35 training involves this international cohort, thus enhancing operational interoperability.
The decision to procure 12 F‑35As instead of additional F‑35Bs is projected to save the UK up to 25 percent per aircraft, enabling more efficient taxpayer investment. The A variant is cheaper to buy and maintain due to the lack of STOVL (Short Take-Off and Vertical Landing) systems and benefits from economies of scale compared to the B variant.
Critically, the Ministry of Defence (MoD) estimates the programme will support roughly 20,000 jobs and over 100 UK-based suppliers, including BAE Systems, Cobham, GE Aerospace, Honeywell, Martin Baker, MBDA, QinetiQ, Rolls Royce, Leonardo UK, Ultra Electronics and EDM Limited.
Plan for SSN‑AUKUS Submarine Fleet
In parallel, the Government unveiled a commitment to build up to 12 SSN‑AUKUS nuclear-powered attack submarines by the late 2030s, replacing the current seven Astute-class boats.
This ambitious programme is expected to sustain 30,000 skilled jobs nationwide, 30,000 apprenticeships, and 14,000 graduate roles over the next decade, providing a notable employment benefit despite the cost of construction.
Construction of the submarines will take place at BAE Systems in Barrow-in-Furness, which has an expanded workforce. At the same time, Rolls‑Royce in Derby will lead reactor development under a £9b “Unity” contract.
The recently signed Geelong Treaty, a 50-year agreement under AUKUS, also deepens UK‑Australia cooperation in submarine construction, boosting exports and supporting significant industrial capacity on both sides.
A Broader Strategic Defence Agenda
The UK Government accepted all 62 recommendations of the recently published Strategic Defence Review 2025 (SDR), ranging from an increase in defence spending to 2.6 percent of GDP, to improving armed forces lethality with AI, cyber capabilities, and long-range weapons. By increasing funding and resources, the defence industry in the UK can be bolstered, supporting the economy and creating additional jobs in support of the armed forces.
The review also forwarded the proposal for £15bn to the sovereign warhead programme, funding of six munitions factories and plans to procure up to 7,000 UK-made long-range weapons, supporting additional defence jobs and industrial expansion, to which the Government allocated funds to accommodate.
Highlighting regional impact, the Clyde 2070 initiative earmarks an initial £250m investment in Scotland, supporting over 26,000 skilled jobs and enhancing shipyard and nuclear enterprise capabilities in Faslane and beyond. As such, despite not being at the forefront or spearhead of actions toward the defence dividend, the F-35A, comparably, should support a substantial number of jobs across the UK.
Delivering on the Defence Dividend?
The UK’s recent announcements suggest it is beginning to make good on the promise of a defence dividend. Nuclear-capable F-35As, a new submarine fleet under SSN-AUKUS, and significant industrial investment are all signals that defence is being used as a tool for both security and national growth.
Programmes are in motion: factories are expanding, such as the Rolls-Royce Raynesway facility in Derby, which will be constructing the reactors for the SSN-AUKUS submarines; and thousands of jobs are being supported across the country, with many more due to be created as plans progress.
But challenges remain. Starmer’s promise of increasing military spending to 2.6 percent of GDP has been achieved at the cost of foreign aid, and Starmer is facing criticism as he has yet to announce where he intends to pull the funds from to hit this goal.
On personnel, the SDR sets a target of increasing full‑time army strength to 76,000, but the recent count shows an active serving force of only just under 71,000.
Despite these shortcomings, the Defence Dividend is still in relatively early progress, and the promised economic impacts, supported jobs, and increase in national security are substantial in their benefits. Given this potential, it can be implied that so far, the highs outweigh the lows. What remains to be seen is if the UK Government can sustain this momentum, and funding, going forward.