Foreign defence firms to invest equal sums back in the UK under new rules

Foreign companies that win large defence contracts will have to invest an equal value back into the UK, Defence Secretary Wes Streeting has announced.

Under the new rules, companies receiving defence contracts worth more than £50m must spend an equivalent amount on British factories, jobs and training. The Ministry of Defence, the government department responsible for the armed forces, will apply the rules on a case-by-case basis from April 2027.

The government has described these investment requirements for overseas businesses as its "offset strategy". An offset is a condition attached to a contract that requires some of its value to be spent in the buyer's own country.

Mr Streeting and Chancellor John Healey will unveil the rules during a visit to BAE's shipbuilding site in Glasgow.

The announcement comes as the government works towards a target of spending 3% of GDP (gross domestic product, the total value of goods and services produced in the economy) on defence by 2030. Earlier this year, the government announced £708 million to accelerate next-generation air combat technology. Gov.uk said more than 4,500 workers across the UK would develop technologies including artificial intelligence and advanced software under the programme.