The defence industry is a driver for UK prosperity and assisting the government’s levelling up agenda, according to research by Oxford Economics.

BAE Systems commissioned an analysis of the economic impact of its UK operations which measures the company’s contribution to the UK’s GDP as £10 billion – equivalent to 0.5 per cent of the domestic economy, according to research by Oxford Economics. The modelling of the report is based on the economic footprint of BAE Systems in the UK in 2020, the latest year for which full economic data is available at the time of publication (January 2022).

The research highlighted BAE’s contribution to the UK economy through jobs, research and development and national supply chains. In addition to developing skills and technologies critical for the defence of the nation, the research found that the company’s operations were helping to drive increased productivity and support the Government’s levelling up agenda.

The company has a footprint across more than 50 UK sites and, adding in its extensive supply chain, the research found that it supported 143,000 jobs and contributed more than £10 billion to UK GDP, equivalent to 0.5 per cent of the domestic economy.

“Unparalled economic value drives UK’s prosperity”

Charles Woodburn, BAE Systems Chief Executive, said: “Our sector not only supports our national defence and security, but also provides unparalleled economic value which drives the UK’s prosperity. The investment we make in highly skilled jobs, research and development and our extensive supply chain supports thousands of companies and tens of thousands of people and the communities in which they live.”

Minister for Defence Procurement, Jeremy Quin MP, said: “In every region of the UK, Defence is driving prosperity, protecting the economy, providing jobs and building skills.

“BAE Systems is a leading light in that progress, helping us level up the country by supporting tens of thousands of jobs as we build back better from COVID-19. Through the Defence and Security Industrial Strategy, we are deepening the relationship between government, industry and academia to bolster British innovation.”

Company supports 59,000 jobs across supply chain in addition to employees

Data published in the ‘BAE Systems’ contribution to the UK economy’ report, shows that in addition to the company’s own 35,300 highly skilled UK employees, nearly 59,000 jobs are supported across the supply chain with more than 49,000 jobs supported through employee and supplier spending.

The company has 5,000 UK suppliers from Scotland to the south west of England who benefited from £3.8 billion worth of spend in 2020. More than 40 per cent of BAE’s employees are based in the UK’s most deprived local authorities. The company also spent £700 million with companies in these areas, making a significant impact to the local communities where it operates and playing a key role in ‘levelling up’.

More than two-thirds of the company’s UK employees are in engineering-related roles and the research found that the highly skilled and technical nature of their work results in an average productivity of £83,000 per employee – 17 per cent higher than the UK manufacturing sector and almost 30 per cent higher than the average across the whole economy.

To ensure a pipeline of talent for the future, the company has invested £93 million in skills, training and development activities in 2020. This has included more than 2,000 apprentices and nearly 600 graduates in training across a wide range of roles from electronics and electrical, structural, software and research engineers, to manufacturing, operations and project management. BAE Systems will this year recruit almost 1,700 apprentices and graduates across the country – 25 per cent up on last year and the largest intake it has offered in a single year.

BAE Systems continues to invest in research & development, self-funding more than £100 million of research in the UK and being the ninth largest patent applicant in the UK. The company also delivered more than £1.1 billion of research activity on behalf of the UK government, helping the country to drive technological innovation.

The company has operations in Europe, the Middle East, Asia, Australia and the US and exported £3.9 billion worth of goods and services from the UK – equivalent to 0.7 per cent of all UK exports in 2020.

The full report can be accessed here.

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