The nine-month lag that Britain has suffered in finalising its plans for military defence has dealt a harsh blow to the country’s military supply base. The government is having difficulty in responding to a growing Russian threat; domestic suppliers are seeing businesses shut down, investments suspended, and a shift towards foreign markets.

The long-awaited Defence Investment Plan (DIP) is likely to be released on Tuesday by Prime Minister Keir Starmer. This will be one of his last efforts in the office before his resignation in July.

The delay is due to months of internal wrangling between defence officials and HM Treasury over a funding deficit of up to £28 billion. Due to this blockage in the bureaucracy, the release of contracts has been dried up more or less, and even the smallest procurements are taking much longer than usual.

Leaders in industry are concerned that this lack of confidence has had a serious impact on the UK’s industrial capacity. Many of the smaller businesses have closed down. One such case: Aeralis, a start-up which is building a modular jet to replace the Hawk trainers in Britain, went into administration in May. Others have closed their defense lines down to concentrate on more stable commercial lines of business.

The Cost of Hesitation on Domestic Manufacturing

With the UK market frozen, a lot of British defence firms are looking overseas to stay alive. The business group called Cohort, which represents seven defense firms, said there has been a “significant surge” in orders from countries such as Germany, Poland and the Baltic states. As a result, in a few years, the UK has shrunk to less than 50% of Cohort’s revenue.

This is taking its toll on Britain’s valuable manufacturing facilities and workforce. The United States will be the likely place of its new factory, as the UK-based company, Q5D, which specializes in automated wiring for the drones, has recently been awarded contracts by the U.S. Army, rather than British forces. Likewise, one British company has established a plant in Canada to “respond quickly to the faster rate of foreign demand.

In the face of the criticism, the Ministry of Defence states it is making a generational investment in defence, with over 1,400 major contracts signed since July 2024. The last DIP is expected to provide the military with the best equipment on offer and to reopen investors’ confidence, officials say.

The only large procurement area where the UK has shown speedy progress is in the support of Ukraine. The creation of a long-range strike weapon has progressed rapidly, and BAE Systems executives say the need to provide Ukraine is still the main catalyst for technology innovations in the UK’s defence industry today.