By Salma El-Sakka
Foreign defence firms awarded UK contracts worth more than £50 million will have to invest an equivalent amount in British factories, jobs and training under new rules announced by Defence Secretary Wes Streeting.
Offset strategy to boost domestic industry
The government's "offset strategy" aims to ensure that overseas procurement still benefits the UK economy. The Ministry of Defence will apply the requirements on a case-by-case basis starting April 2027. Similar rules exist in Poland, Norway and the Netherlands.
Pressure to meet 3% GDP spending target
The policy comes as the government faces scrutiny over its pledge to raise defence spending to 3% of GDP by 2030. Critics, including Labour MP Tan Dhesi and Conservative leader Kemi Badenoch, have warned of delays in setting out a credible funding plan. Streeting rejected claims the government is postponing tough decisions, saying ministers need the next spending review to assess priorities "in the round".
Industry impact and political context
Streeting and Chancellor John Healey will unveil the details during a visit to BAE Systems' shipbuilding site in Glasgow. The approach is seen as a way to make additional defence investment more politically palatable without immediate large-scale spending increases. Estimates suggest an extra £10 billion annually may be needed to hit the 3% target, while NATO allies aim for 3.5% by 2035.
