A|D|S claims defence spending cuts will cause great harm to economy

IanGodden of ADS: critical of defence cuts

A|D|S released a new report Friday examining the major contribution that the UK-based defence industry makes to the nation’s economy and how investment made in the sector delivers an even greater return to the wider economy as well as preventing the well-documented and risky loss of crucial capabilities for the Armed Forces.

A|D|S is a trade body for the Aerospace, Defence, Security and Space industries.

The report, produced for A|D|S and the Defence Industries Council by Oxford Economics, shows the unintended economic consequences, in addition to the obvious reduction in the UK’s military capability, of the Government seeking to reduce further the defence budget.

It also found that in total the UK defence industry supported 316,000 full time equivalent (FTE) jobs in the UK in 2008.  Furthermore, a £100 million notional investment would generate over 2,000 additional jobs in the UK in a variety of sectors.

Ian Godden, Chairman of A|D|S, said: “The UK all too frequently shoots itself in the economic foot and sadly it risks doing so again in defence, a sector where it is globally competitive. We will live to regret the day that we put at risk fully ten per cent of our total manufacturing base.”

Godden attacked critics of defence spending. “This report highlights that a careful investment in defence will deliver major economic benefits.  The case for investment is clear when the vocal minority’s ‘anti-defence’ rhetoric and misinformed sentiment looking to buy from other nations is stripped away.  The investment would not only boost our flagging economy but would also provide breathing space needed to enact the major and lasting defence reforms on which to build for the long term. 

Alongside an increase in employment a nominal £100 million investment in the defence industry would also deliver an estimated £230 million of benefits to the domestic economy composed of:

  • A direct impact, being the initial investment of £100 million into the defence industry.
  • An indirect impact of £70 million, as defence firms respond to the increase in demand by increasing their demand for UK produced inputs from their supply chain.
  • An induced impact of £60 million as UK firms respond to the increase in demand by hiring more employees to increase capacity. These employees subsequently purchase goods and services in the UK economy.

Godden added: “The 20 per cent cumulative cut in the MoD’s research and technology budget over the last three years leaves us dangerously close to seeing UK troops with inferior equipment in the next five to ten years due to this fall in investment.”

For more information
A|D|S website  
OxEcon Report Final 08042011.pdf   
ADS PR 2011 023 – OEF defence report.pdf

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