29 May 2018

Will Brexit impact the UK’s defence & security sector?

Richard Morgan, head of our defence, security & the forces sector (recently recognised with the MoD’s silver award for services to the military community) shares his thoughts on Brexit’s impact for the sector.

What are the immediate challenges?

The UK has sadly experienced an increase in terrorist attacks in the last few years, many citizens and visitors are worried that the UK’s security services post-Brexit will be under more pressure. There is a real concern that information about potential terror suspects might not be shared as freely by the EU with the UK to help prevent future attacks.

What we need to remember, is that communications within the EU haven’t always been perfect, so while there may be some security issues post-Brexit, it’s likely that some UK-EU collaboration on security will continue. More significant is the possible non-availability of funding that may undermine the ability of the UK to keep up-to-date with the changing nature of terror attacks.

UK companies have been particularly successful in securing EU funding for research and development projects within the sector (since 2007, they have successfully bid for over £8bn in research grants). With 90% of the UK’s defence and security innovation based in the ‘golden triangle’ (Herefordshire, Worcestershire and Gloucestershire), the impact in this region could be significant if the funding regime changes.

Post-Brexit, UK companies will need to look outside the EU to secure funding. For businesses that currently rely significantly on EU funding, now is the time to start considering what other funding opportunities are available, particularly as the procurement process in the sector can be protracted.

What type of EU funding do UK based companies and consultants currently receive?

One example is the large number of defence and security consultants delivering ‘reconstruction’ and ‘rule of law’ projects in former war zones such as Afghanistan and Iraq, helping to train local police and military.

Recently, the EU has indicated that the UK will not be given access to the Galileo project (the rival to GPS) post-Brexit. HMG retaliated by threatening to impose requirements on UK companies not to share the enabling technology, and to refuse access to British overseas territories for the relay stations, which would require the EU to re-budget the entire project. The political landscape is so volatile that it will be impossible for UK businesses to forecast reliably based on EU funding.

What should business leaders in the sector do next?

In short, think more broadly – investigate the opportunities, research those countries outside the EU which may need your products or services, network and attend trade shows.

Many UK companies are beginning to work more closely with NATO, which has access to separate funding and a wider membership than the EU, including the USA. At HCR, we are working with representatives of the NATO industry group, NIAG, to develop opportunities for UK businesses. The Department for International Trade is promoting the British defence industry via commercial officers in embassies and trade missions overseas.

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About the Author
Richard Morgan, Partner, Head of Dispute Resolution, Defence, Security and the Forces Sector & London Office
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