Welcome to Market Watch: Aerospace, Defence & Security

This week’s developments point to a defence market where ambition is being tested against delivery.

The UK’s forthcoming Defence Investment Plan will be a key measure of whether strategic commitments can be matched with credible funding, procurement reform and industrial capacity. The UK is also opening faster routes for new defence suppliers, while Finland is broadening its defence spending framework and France is investing in mobile radar to strengthen short- and very short-range air defence.

The common thread is clear: higher budgets are not enough. Governments now need capability that can be funded, procured and deployed at speed. For industry, the test is whether suppliers can move from promise to fielded capability.

Visiongain Top Takeaways

• The UK’s forthcoming Defence Investment Plan will test whether defence ambition is backed by credible funding.
• MoD affordability remains a central concern, with previous equipment plans showing a significant projected budget gap.
• The Royal Navy’s hybrid force ambition is strengthening demand for uncrewed systems, affordable mass and faster integration.
• The UK’s defence unicorn contracts show procurement reform moving from policy intent to live awards.
• Finland’s spending approach highlights the growing role of total defence, resilience and civil preparedness.
• Saab and Scania France’s Giraffe 1X contract reinforces demand for mobile air defence and counter-UAS radar capability

Market Activity

United Kingdom: Defence Investment Plan Becomes The Key Test

In UK defence, the Minister for Defence Readiness and Industry has set out an ambition for a “1,000-ship navy” built largely around uncrewed vessels. He also stated that equipment unable to prove itself in Ukraine would not be procured for British forces.

Luke Pollard MP, speaking at the Combined Naval Event 2026, described the hybrid navy concept set out in the Strategic Defence Review as “the most exciting transformation of the Royal Navy since its creation nearly 500 years ago”.

The ambition comes as the UK Government is expected to publish its Defence Investment Plan, setting out future expenditure and the broader direction of defence spending. The hybrid force concept aligns with the Royal Navy’s stated direction, combining crewed and uncrewed systems to increase mass, survivability and operational flexibility.

However, affordability remains the central issue. A parliamentary review into the existing defence investment plans stated:

“In the most recent defence Equipment Plan, the Ministry of Defence (MoD) expected overall costs to exceed its own budget by £42.5bn over the ten years to 2033. Equipment costs made up £16.9bn of this. Spending at 2.5% of GDP in 2027-28 will represent £13.4bn more than was spent in 2024-25. In its June 2025 report on the future of the Equipment Plan, the PAC voiced its extreme disappointment that the MoD had been continuing to fail to facilitate parliamentary scrutiny of how it would manage its funding for military equipment – historically carried out through an annual Equipment Plan, which unacceptably MoD had been refusing to publish since November ’22.”

The National Audit Office’s new “Affordability of the MoD’s investment plan” document is expected to follow soon after the overdue Defence Investment Plan. Industry will be watching both documents closely for evidence that the UK can match ambition with a funded and practical delivery model, giving suppliers the clarity needed to plan investment, capacity and delivery.

Visiongain Insight: The UK defence market is entering a test of credibility. Strategic ambition is clear, but suppliers and investors now need evidence that funding, procurement reform and industrial capacity can turn policy into deliverable programmes. The opportunity is significant, but the near-term constraint is increasingly affordability, timing and execution rather than demand.

United Kingdom: Defence Contracts Target Faster Procurement For Future Unicorns

In further UK aerospace, defence and security news, 13 British companies have been awarded contracts worth up to £4 million to work with the Ministry of Defence. The awards are intended to accelerate procurement, support innovation and deliver advanced technology for the UK Armed Forces.

The companies awarded contracts are:

• The RC Den Ltd, London
• Aquark Technologies Ltd, Hampshire
• Aether Aerospace Ltd, Newport
• SpaceAM Ltd, London
• Avenue 3 Ltd, West Yorkshire
• Nereus Medical Ltd, Devon
• Kraken Technology Group, Hampshire
• Flowcopter Ltd, Edinburgh
• Helyx Secure Information Systems Limited, Buckinghamshire
• EP90Group Ltd, Winfrith Newburgh
• Ritson Reid Ltd, Berkshire
• SimCentric Limited, Oxfordshire
• Spectra Group (UK) Ltd, London

The winning companies span priority capability areas, including quantum sensing, autonomous systems, secure communications, space manufacturing, and synthetic training, reinforcing the Government’s focus on accelerating the development of operationally relevant defence technology.

The awards form part of the Government’s commitment to make Britain the best place to start and grow a defence business. They are backed by the MoD’s commitment to increase defence spending with small and medium-sized enterprises by 50% by May 2028. This represents an additional £2.5 billion, bringing total SME spend to £7.5 billion.

The fund sits within a wider package of reforms to open defence to the next generation of British innovators. The scheme provides accelerated contracts to small, innovative British companies that have done limited or no previous business with the Ministry of Defence. More than half of the winning firms are new to defence, with contracts awarded across England, Wales and Scotland less than four months after the “defence unicorn” fund was announced.

The contracts were awarded through Commercial X, the Ministry of Defence’s accelerated contracting vehicle, as part of the Government’s search for Britain’s next defence unicorn. They also support the Government’s Industrial Strategy by opening new routes for small and growing businesses into the defence sector.

The awards underline the Government’s focus on getting contracts to innovative British businesses faster than traditional procurement routes allow, while bringing new technology into the hands of the UK Armed Forces more quickly. They also support jobs in communities across Britain, including Devon, Edinburgh, Newport in Wales and West Yorkshire. All the companies were founded after 2011, with most established in the last six years.

Defence Secretary John Healey MP said:

“This government is backing British innovators and entrepreneurs, doing things differently to deliver for our forces.”

Praful Nargund, Director of The Good Growth Foundation, said:

“Our research shows that to build a defence settlement that lasts, the public needs to see the benefits of defence spending brought home to the UK. Pounds spent on defence must do double duty, protecting both our national security and our economic security.”

Chris Isaac, CEO and Founder of SpaceAM, said:

“Game changer! In just five weeks.. six new staff, our first commercial labs operational, top London VCs lining up to invest, and the ability to scale at pace with confidence. That’s what this Unicorn Fund has delivered.”

Phil Bottomley, CEO of Avenue3, said:

“As an SME, this level of investment is transformative. It allows us to grow sustainably, create high-value jobs, and continue delivering complex engineering programmes at pace. It’s a strong signal of the role that smaller, specialist companies like Avenue3 can play in supporting national priorities while driving local economic growth.”

Visiongain Insight: Defence procurement reform is becoming a market access issue. Faster contracting routes create opportunities for SMEs and new entrants, but they also raise expectations around delivery, operational relevance and industrial credibility. The companies best positioned will be those able to turn early-stage funding into repeatable, supportable defence capability.

Finland: Total Defence Moves Into The Spending Framework

Finland expects to exceed NATO’s 1.5% target for defence and security-related spending in 2026, Defence Minister Antti Häkkänen said. The Finnish Government’s Ministerial Committee on Economic Policy has outlined which costs Finland will report under the NATO category.

The announcement sits within NATO’s new 5% framework, which separates core defence spending from wider defence and security-related investment.

Häkkänen said:

“Total defence is an essential element of Finland’s defence. Traditionally, Finland has always sought to ensure the resilience of our civil society, and now we have stepped up our efforts.”

He added:

“The fact that we are able to exceed the NATO target already this year, the first year of reporting, shows that we take total defence seriously.”

The Finnish Government stated:

“The Ministerial Committee on Economic Policy of the Finnish Government has outlined that the expenditure Finland will be reporting under NATO’s 1.5 per cent target for defence- and security-related spending will include statutory readiness and preparedness duties or capabilities critical to homeland defence that are sustained and developed by other branches of government than the Ministry of Defence. These costs are estimated to reach 2.4 per cent of gross domestic product (GDP) in 2026, clearly exceeding the NATO target.”

Based on NATO’s agreed definition of defence expenditure, Finland’s 3.5% target includes the defence budget, parts of the Finnish Border Guard’s expenditure, the Ministry for Foreign Affairs’ share of military crisis management operations and retirement pension payments by the defence administration.

Häkkänen said:

“The 1.5 per cent target for defence- and security-related spending includes the costs of such activities as enabling the execution of operations plans, strengthening the defence industrial base, promoting innovation in the defence sector, safeguarding civil preparedness and resilience, and supporting Ukraine. All these we have been promoting with determination.”

Although Finland will exceed NATO’s 1.5% target, the Government stated that this will not affect progress towards the 3.5% target for core defence requirements. It also sits alongside Finland’s wider effort to raise core defence spending in the coming years, reinforcing demand across readiness, resilience and domestic defence capacity.

Visiongain Insight: Finland’s approach shows how national security investment is expanding beyond traditional equipment budgets. Industrial resilience, civil preparedness, innovation and support for Ukraine are increasingly being treated as core elements of defence capability rather than adjacent policy areas.

France: Giraffe 1X Contract Reinforces Mobile Air Defence Demand

Saab and Scania France have signed a contract with the Direction générale de l’Armement to supply Giraffe 1X radars and develop a solution using Scania tactical vehicles for the French Armed Forces.

The contract covers 17 Giraffe 1X radars. One radar will be used for test and evaluation, while 16 will be installed on the Scania V3P chassis, a tactical vehicle developed by Scania France and its SPAD division in Angers, France.

The agreement also includes spare parts, training and support. Saab and Scania France have formed a joint consortium for the duration of the contract, with deliveries of the radars scheduled between 2026 and 2027.

The vehicle-mounted configuration also supports France’s wider move towards mobile, distributed short-range air defence.

Carl-Johan Bergholm, Head of Saab’s Surveillance business area, said:

“We are proud to work together with Scania France on this important contract, with the aim of modernizing the short-range and very short-range air defence capabilities for the French Armed Forces.”

Giraffe 1X is a compact, high-performing 3D radar that is already contracted and in service with several customers. The system can support air defence, counter-unmanned aerial systems, protection of buildings and sites, and maritime applications across a range of vessel types.

The radar is software-based, allowing it to be upgraded over time to meet new types of threats.

Visiongain Insight: Radar demand is being reinforced by the growth of low-altitude and unmanned aerial threats. Mobile, upgradeable systems are increasingly attractive because they can support air defence, counter-UAS, and site protection roles from a single platform family. This strengthens the outlook for suppliers that can combine sensor performance with mobility, integration and lifecycle upgrade potential.

Market Outlook

This week’s developments highlight a defence market shaped by rising demand, but increasingly constrained by delivery credibility.

The UK’s forthcoming Defence Investment Plan will be an important signal for industry. It must show how strategic ambition, hybrid force design and faster procurement will be supported by sustainable funding and realistic execution. Without that clarity, the gap between policy ambition and industrial delivery will remain a central concern for suppliers, investors and procurement teams.

The UK’s contracts for future defence unicorns also suggest that procurement reform is beginning to create practical routes for SMEs and new entrants. This could support a more diverse supplier base, but only if early-stage innovation can move into repeatable, deployable and supportable systems.

Finland’s spending framework points to a broader definition of defence investment, where civil resilience, industrial capability, innovation and preparedness sit alongside core military expenditure. France’s Giraffe 1X contract reinforces continuing demand for mobile radar and counter-UAS-relevant systems, particularly as European defence requirements adapt to persistent drone and low-altitude air threats.

Together, these developments show a more fragmented but opportunity-rich market. Demand is widening across established and emerging capability areas, but suppliers are being judged more sharply on credibility, speed and the ability to turn investment into fielded systems.

Visiongain Insight: Defence markets are moving from intent to evidence. Opportunities are broadening across uncrewed systems, radar, counter-UAS, simulation, electronic warfare and resilience infrastructure. However, competitive advantage will sit with suppliers that can show operational relevance, funding visibility and a credible route from contract award to fielded capability.

From Visiongain

Visiongain’s defence intelligence supports strategic planning across procurement, autonomy, resilience, counter-UAS, sensing, AI-enabled defence systems and emerging military capability areas.

• Military Identification Friend or Foe Market Report 2026-2036
• Distributed Fibre Optic Sensing (DFOS) Market Report 2026-2036
• Small Drones Market Report 2026-2036
• Undersea Defence Infrastructure & Security Market Report 2026-2036
• Hypersonic Missile Defence Systems Market Report 2026-2036
• Military Artificial Intelligence (AI) Systems Market Report 2026-2036

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