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UK ASD Industry


Historically a strong global Defense market, the UK is also focusing on the Space sector, mainly due to low aircraft assembly capabilities

UK ASD industry overview


2012-17 CAGR

The British ASD industry grew by 7,8%/ year, reflecting an increase of 0,5 pp in % GDP (2012-17)


UK ASD revenues[€bn, 2012-17]


  • In 2012-17, the UK government increased its ESA(1)contribution to reach 25% in public spending, attracting FDI2from major players
  • UK Space sector represents 10% of the global Space turnover, and is one of the largest suppliers of global nanosatellites currently in orbit
Small satellites manufacturing and cybersecurity are the main drivers for continuing growth



  • To meet global environmental targets, government is investing €106 million in the next years to develop new aircraft generations (e.g., electric aircraft solutions)
  • To improve manufacturing productivity, efficiency and spending in R&D, government invested €103 million in 2018


  • Government ambitions for the sector include the growth of Space tourism, planning on investing €20 billion in the next 20 years
  • The UK’s Space sector has manufactured 40% of the total small satellites in orbit and forecasts a 10% capture of the global Space sector by 2030


  • Pressure to reach the NATO’s 2,0% of GDP and a forecast of more than €7 million security exports in 2022 (+30% than 2018) led to the increase of the 2017 Defense budget by 1,4% (reaching €42,6bn)
  • Due to more than €5,5million year of cyber offences in the UK (half of the total national crime), the government is investing €25 million in Defense R&D

Notes: (1) ESA -European Space Agency; 2) FDI –Foreign Direct Investment
Sources: ADS, MarketLine, UK Government, Mergent, Business Matters, World Finance, EY analysis

The UK aerospace industry lacks an industrial cluster structure, with Brexit meaning significant uncertainty in supply chain dynamics

UK ASD industry: SWOT

Internal Factors


  • Strong capabilities in wings, propulsion systems and aero-structure parts manufacturing and integration
  • World leading players in engine manufacturing and integration
  • Best-in-class engineering schools
  • Strong apprenticeship and graduate programmes and public funding for up-skilling of staff


  • Limited funding opportunities for later-stage product development
  • Lack of a nationwide cluster
  • Shortage of skilled manufacturing engineering skills
  • Lack of a true global UK-based OEM
  • Lacking certified capabilities in surface treatmentis a blottleneck for the entire supply chain
  • SMEs build around technical innovations, but lacking management, financial and supply chain expertise
External Factors


  • Increasing qualification levels by workforces in emerging countries represents an opportunity for outsourcing high-labour, low complexity product manufacturing
  • Future aircraft programmesrequiring capabilities aligned with new technologies (e.g., electric propulsion systems, composite materials)
  • Solid public support for early stage technological innovation and product development (e.g., Research Council grants)
  • Possible positive impact from Brexit to emerging UAV sector due to less stringent regulatory context


  • Post Brexit regulatory regime could result in dual certification requirements, increase costsand discourage investment in UK
  • Brexit to drive down supply chain efficiency, as the majority of parts manufactured in the UK are assembled in the EU
  • Brexit could reduce high skilled workforce mobility, a critical aspect of the industry
  • Lack of lean process capabilities hinders productivityand reduces global competitiveness versus low-cost markets

Sources: Ecorys, Marketline, ADS, UK Department for Business Innovation and Skills, EY analysis