Barclays: Over half of UK businesses expect positive impact from defence investment but leaders call for targeted support
Research from the Barclays Business Prosperity Index reveals:
- 74% of UK businesses support the government’s plan to raise defence spending to 5% of GDP by 2035
- 60% believe government investment in defence can create economic opportunities in their sector
- Over half (51%) expect increased defence spending to have a positive impact on their business, and 56 per cent anticipate benefits for their region
- There is appetite for government support: 38% say a Defence Guarantee Scheme would encourage them to enter the supply chain, and 34% want improved access to sector-specific skills and training
The Barclays Business Prosperity Index, which includes a survey of 1,000 business leaders across a range of sectors, shows strong support for the government’s increased defence spending (74%). This sentiment is consistent across business sizes and regions, reflecting a broad consensus that defence sector investment is both necessary and potentially beneficial for the wider economy.
Of those surveyed, 24% have been involved in defence contracts or supply chains on one occasion, 17% on multiple occasions and 25% have never been but are interested in future opportunities.
Among those expecting a positive impact, 56% see boosting research and development in new technologies as the main benefit to their business. Half (50%) highlight the creation of new contracts and opportunities within local supply chains as a key benefit, while 53% anticipate enhanced skills and workforce development.
More broadly, 51% believe defence spending will attract new investment or partnerships to their region, and 40% expect it to support SME growth, innovation, and job creation locally.
Yet despite optimism, a third of businesses (32%) said they require simplification of regulatory requirements, such as compliance reporting, clearer guidance on the procurement process (33%) and a trusted supplier white list to streamline due diligence (30%).
Half now more positive about working with Defence sector
Business leader sentiment for the sector’s ESG risks is nuanced. Close to half (45%) of businesses report increased caution for the ESG risks of working with the sector, while 20% note decreased ESG concerns and greater openness to defence, with almost a third (32%) reporting no change.
This broadly mirrors the sentiment of their business’ customers, with 43% indicating heightened customer ESG caution, yet 21% seeing growing openness.
Despite ESG caution, over half (53%) are now more positive about working with the defence sector, compared to only 3% who have formed a more negative view over the past 12 months.
Leaders call for further support to enter supply chain
To unlock the full potential of defence-driven growth, business leaders are calling for:
- Improved access to sector-specific skills and training (34%)
- Greater transparency around ESG expectations and reputational safeguards (34%)
- Financial incentives or support schemes (34%)
Almost four in 10 (38%) say a Defence Guarantee Scheme, where the government would offer financial guarantees for capital and investment, would encourage them to enter the supply chain.
The findings from the Barclays Business Prosperity Index defence research will be featured at the Department for Business and Trade’s Global Space Finance Summit on Wednesday 10 December 2025, which brings together senior policymakers, including Lord Stockwood, Minister for Investment, and experts from across the defence sector.
Matt Hammerstein, CEO of Barclays UK Corporate Bank said: “Our research shows that businesses are increasingly interested in supporting the defence sector, with many ready to innovate and enter supply chains.
“To unlock the full potential of defence-driven growth, we urge the government to sustain momentum on defence investment by streamlining export and compliance regulations and providing targeted support such as a Defence Guarantee Scheme. These steps will help more UK businesses seize the opportunities presented by increased defence investment.
“At Barclays, we’re committed to supporting the sector and helping firms unlock new opportunities to drive innovation and growth across the UK, whilst providing a range of financial products and services to UK, US and European defence companies that supply NATO and its allies.”
Abdul Qureshi, managing director of Barclays Business Banking said: “Increased defence spending presents a significant opportunity for SMEs to innovate and grow, particularly those in frontier tech.
“Many high potential start ups and scale ups are eager to participate with corporates and enter the supply chain – and these businesses have a vital role in driving regional growth. We’re committed to helping businesses seize new opportunities and support their investment plans through tailored solutions and the Business Prosperity Fund.”
Barclays Business Prosperity Fund
To support business to invest for growth, The Barclays Business Prosperity Fund is available for new and existing Business Banking customers and UK Corporate Banking clients across the UK to apply for lending and refinancing on existing projects. Businesses can find out more at: home.barclays/businessprosperity.
£22bn is the total amount of lending Barclays has available to lend and support business growth among Business Banking and UK Corporate Banking clients in 2025. Subject to normal lending assessment, status and application. Terms and conditions apply.