Chancellor Rachel Reeves says more defence spending will keep Scotland safe and deliver more jobs

Increased defence spending will not only keep Scotland safe but also boost jobs and wages, the UK chancellor has claimed.

It comes as the UK Government announced a £2bn increase to support British defence sector exports on Friday morning.

Rachel Reeves said the funding is “the biggest sustained increase in defence spending since the end of the Cold War”.

The money will increase the UK Export Finance (UKEF) lending capacity – a measure the Government believes will boost opportunities for firms selling equipment such as missiles, aircraft and armoured vehicles on the international market.

Following the announcement on Friday morning, the chancellor visited Babcock, a defence firm in Rosyth, and emphasised that increasing defence spending is the “right thing to do”.

“The world has changed, we can see that before our eyes,” Reeves told STV News.

“We need to spend more, and we are spending more, on defence in the UK. We want that to benefit jobs growth here in Britain, including here in Scotland.”

The chancellor said the increase should also benefit Scottish jobs.

Scotland is a hub for the UK defence industry, home to companies such as Babcock and BAE Systems, and the industry has previously benefitted from UKEF support.

UKEF has previously supported Babcock with a £192m loan guarantee to finance the sale of two mine counter measure vessels to the government of Ukraine.

Scotland’s defence sector also received £2.14bn in UK Government spending in 2023/24, supporting approximately 25,600 jobs.

“It’s incredibly important that the UK and our allies spend more to keep ourselves protected,” Reeves added.

“Exporting to our allies and ensuring good job paying decent wages here in Scotland and across UK is in our national interest as we step up what we spend on defence.”

Less than 24 hours earlier on Thursday, First Minister John Swinney faced calls from Scottish Labour leader Anas Sarwar to promise a “renewed focus” on national security.

Sarwar urged the SNP Government to support a “fit for purpose” skills system to take “full advantage of the investment that is coming to Scotland”.

The Scottish Labour leader said Scotland’s “proud history and present-day strengths in shipbuilding, engineering and manufacturing” mean that an increase in defence spending can “disproportionately benefit us”.

“However, our outdated skills system holds Scotland back, with businesses warning of workforce shortages and modern apprenticeships being at their lowest level in a decade,” Sarwar said.

“The reality is that much of the skilled labour in Scotland’s defence industry is coming from abroad on temporary contracts because we are not equipping Scots with the skills that they need.”

Swinney said his Government is already investing heavily in “a number of elements” to enhance “manufacturing capabilities”, and they are in discussions with the delivery board on the national strategy for economic transformation about these skills issues.