We can barely make steel any more, so extra weapons might be a stretch
To be a ‘defence industrial superpower’, you don’t just need a defence industry — you need industry, full stop
Somewhere in the Treasury, there is a civil servant whose job is to produce Britain’s growth plans. To generate PDF after PDF featuring stylised maps of the country, haloed with neon light, suggestive of energy, vigour and dynamism. To that nameless graphic designer, Rachel Reeves’s promise to make Britain a “defence industrial superpower” will have resounded like a bugle call. The rest of us may be a tad more sceptical.
It’s not just that the government’s mission until only a few days ago was to make us a clean energy superpower instead (pinky-purple wireframe wind turbine, very tasteful). It’s that, increasingly, the only thing Britain leads the world at is saying we’ll lead the world. In fact, “world-leading” has been used in 2,386 prime ministerial announcements and press releases in recent years. Not least by Boris Johnson.
Of course, it’s a good and necessary thing that the government is spending more on defence. But that extra £25.3 billion, spread over five years, represents only 0.35 per cent of Britain’s projected £7.2 trillion outlay over that period. So, while it will certainly sustain the defence sector, it is unlikely to move the economic needle.
But there’s another problem. To be a “defence industrial superpower”, you don’t just need a defence industry — you need industry, full stop. China’s naval shipbuilding capability is estimated to be 232 times that of the United States largely because it dominates civilian shipbuilding too.
Without that industrial base, there is the risk that most of the parts for those fancy jets, tanks and drones, and even more of the raw materials, are coming from states that are not 100 per cent on your side. So how’s that going? Well, last week British Steel — already Chinese-owned — announced that it might have to close its remaining blast furnaces at Scunthorpe, which would make us the only G7 country that cannot produce virgin steel.
It’s not alone. Car production in the UK, traditionally a key strength and key export, has halved over the past six years, even before Trump’s tariffs. North Sea oil and gas is collapsing. Refineries are closing: Sir Jim Ratcliffe, whose firm Ineos is closing the oil refinery and ethanol plant at its Grangemouth site, says we are “witnessing the extinction” of the chemicals sector. The ceramics industry recently announced a “rescue plan” to address “unprecedented challenges”. Britain’s foundries, whose output has already fallen by 85 per cent since 2000, face further closures.
In this environment, press releases from industry groups drip with desperation. Make UK, the umbrella body for manufacturing, complains that “manufacturers feel like they are currently wading through treacle, facing barriers and increased costs being imposed on them at every turn”. The chemicals industry warns of energy bills that are 400 per cent higher than in America, “unsustainable costs” and a “hostile policy agenda”, asking — as Ratcliffe did — whether the country wants it to exist at all.
A large part of the problem is, as the above suggests, energy prices and charges — which are being made worse by Ed Miliband’s desperate dash to decarbonise the grid by 2030, irrespective of the costs.
But as I’ve pointed out before, we’ve also designed our entire net-zero system to count emissions in the UK only. So if that British Steel plant shuts down, and we start importing from China or India, it counts as a carbon win even if their steel is produced using the dirtiest coal on the planet and with none of the green levies we apply here.
In recent decades the proportion of our carbon emissions incurred through imports has duly been rising. In the process, as Kemi Badenoch pointed out recently, we have become overwhelmingly dependent on China to reach net zero — and, increasingly, to keep the lights on — since it dominates the production of solar panels, wind turbines, electric cars and more besides.
But it’s not just about energy or climate. Britain has displayed a slapdash indifference to its manufacturing sector. We permitted the ridiculous ossification of the planning system, making it hard to build not only houses but factories, laboratories and the roads to connect them. George Osborne funded his corporate tax cuts by slashing the capital allowances that manufacturers relied on to invest.
Year after year, the country that invented the Industrial Revolution sets new records for how small its manufacturing sector can shrink as a share of GDP. As of 2023, it was 8.3 per cent — half of the level in 1990. Of course, manufacturing is struggling across the West: just look at Germany. China is eating everyone’s lunch. But our sector is a smaller part of the economy than in any of our main competitors.
We are also well below our peers in R&D investment. A few years ago the analyst Rian Chad Whitton pointed out that only 121 British companies appeared in a list of the world’s top 2,500 spenders on R&D. In the 2024 edition of the same index, that had fallen to 63 out of the top 2,000. And many were firms such as AstraZeneca, GlaxoSmithKline or Rio Tinto, which have a corporate presence in the UK but operate and innovate across the globe.
Britain, in short, has been conducting a vast experiment to see how much a country can grow without making or building stuff — creating an economy that privileges not only services over manufacturing, but the intangible over the actual.
In a fascinating piece the other day, Whitton showed that between 2000 and 2023, Britain’s reliance on imports for basic materials grew hugely, even as our consumption of those materials shrank. We use much less cement than our neighbours, much less steel, much less tarmac, much less fuel, to the point where we look more like a Latin American than a western European country in the data.
Whitton concludes that “the British economy’s ability to actually process new material, from gravel to advanced machinery, is internationally substandard”, and that we are “the most un-automated major country in the developed world”.
I wish ministers well with their plans to make us a defence superpower. But it’s hard to reconcile that ambition with our status as a country in which making things is often viewed as a second-class activity, which relies on other nations for a striking proportion of the physical goods it consumes, and which has adopted policies on energy, climate and planning that are actively making those problems worse.
America, under both Biden and Trump, has belatedly become serious about reindustrialising, in particular its military production. Far from being a “superpower”, Britain is scrabbling to catch up in a world in which all too many of our supply chains, whether for energy, technology or industry, ultimately depend on the kindness of strangers.
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