Iran Conflict Exposes UK Readiness Gaps as Forces Deploy to Defend British Interests

The US-Israeli strikes on Iran that began on 28 February dominated this week. A drone struck RAF Akrotiri in Cyprus over the weekend, prompting Starmer to order HMS Dragon — a Type 45 air defence destroyer — to the Eastern Mediterranean on 3 March, alongside Wildcat helicopters armed with Martlet anti-drone missiles. RAF F-35B Lightning jets achieved their first combat kills, shooting down hostile drones over Jordan, while a Typhoon from the joint UK-Qatar 12 Squadron downed an Iranian one-way attack drone targeting Qatar.

However, HMS Dragon's departure from Portsmouth was delayed by maintenance requirements and questions over 9-to-5 working patterns at the dockyard under a Serco contract — drawing criticism about readiness at a time of real operational need. Starmer agreed to allow US use of British bases for "defensive" strikes on Iranian missile sites, but continued to refuse UK participation in offensive operations, prompting public criticism from President Trump. By the end of the week, Healey confirmed UK forces were flying continuous defensive sorties across the region.

What matters: The Iran crisis is stress-testing UK force readiness, basing arrangements and defence-industrial support in real time. Companies across the counter-drone, air defence, munitions and logistics support sectors should expect both near-term operational demand and longer-term programme acceleration. The political pressure to publish the Defence Investment Plan (DIP) and accelerate spending has intensified sharply.

Spring Statement: OBR Says Further Defence Spending Increases "Necessary" — Chancellor Reeves delivered the Spring Statement on 3 March, claiming the biggest uplift in defence spending since the Cold War. The more significant development came from the Office for Budget Responsibility, which stated that further increases in UK defence spending are now "necessary" given the uncertain geopolitical environment — language that goes beyond treating defence as a minimum insurance premium. However, the Spring Statement contained no new defence funding beyond existing commitments and no DIP publication date. The OBR acknowledged its own forecasts may already be out of date given the Middle East conflict, noting risks to energy prices, growth and inflation from the disruption to Gulf supply routes. Defence spending to reach 3.5% of GDP remains the stated NATO target.

What matters: The OBR's language creates fiscal and political space for accelerated defence spending. Combined with the Iran crisis and industrial pressure from Unite and the primes, the case for the DIP is becoming harder to defer. ADS Group welcomed the renewed commitment but called for clarity on how defence strategies will be funded.

Defence Investment Plan "Will Be Published When Ready" — In the House of Lords on 5 March, a defence minister confirmed the DIP remains in preparation and will be published "when it is complete," adding that major spending decisions are already being taken ahead of it. The minister acknowledged the need to match budget to capabilities in a changing threat environment.

What matters: The government is now openly decoupling individual procurement decisions from the DIP — as seen with the NMH award. This may become the pattern for other pending programmes.

£1bn New Medium Helicopter Contract Formally Awarded to Leonardo — The MOD formally announced the £1 billion contract for 23 AW149 medium-lift helicopters on 2 March, ending months of uncertainty. The aircraft will be built at Leonardo's Yeovil facility, securing 3,300 jobs and positioning the site as Leonardo's global centre for military helicopter production and exports. The MOD also confirmed further investment in Proteus, the UK's first autonomous rotary-wing uncrewed air system, which completed its maiden flight in January. The government estimates international orders for Leonardo's military helicopters built in Yeovil could generate over £15 billion in exports over the next decade across around 20 countries with medium-lift requirements.

What matters: The NMH award is the first major programme decision taken outside the DIP — a precedent that may unlock others. For supply chain companies, the programme involves nearly 70 UK firms with a workshare above 40%. The Proteus autonomous rotorcraft investment signals a growing link between crewed platforms and uncrewed systems as a procurement theme.

Midlands Family Business Wins Contract to Build Largest UK Naval Anchors in 70 Years — Solid Swivel, a Cradley Heath family business established in 1910 and the UK's last known anchor and chain manufacturer, has secured a multi-million pound DE&S contract to produce over 30 anchors and 2,300 metres of chain for the Royal Navy fleet. This includes six anchors for the Queen Elizabeth-class carriers, each weighing over 12,500kg. Solid Swivel will work alongside two fellow Midlands firms, Somers Forge and Goodwin Castings, with forging starting in April.

What matters: A small but telling example of sovereign capability being rebuilt through SMEs. The contract ends UK reliance on imported anchors and demonstrates what DE&S means by making defence an engine for regional growth. The 14-person workforce and regional supply chain model is the kind of story that resonates with policymakers championing SME access.

UK Defence Exports Hit £13.2bn as Europe Overtakes Middle East — The MOD published UK Defence Export Statistics for 2024 on 5 March — the first time the statistics have been released under MOD responsibility following the transfer of the defence exports function from the Department for Business and Trade. UK defence export orders reached £13.2 billion in 2024, up 10.4% from £11.9 billion in 2023. Europe has overtaken the Middle East as the largest market for UK defence exports, driven largely by major contracts with Poland. Aerospace remained the dominant export sector, accounting for around 53% of total orders over the 2020–24 period.

What matters: The shift toward European markets reflects growing NATO-driven demand and validates the export potential of programmes like Arrowhead 140 (Type 31) and Typhoon. The MOD's ownership of export statistics and promotion signals a more integrated approach to defence exports as an industrial strategy tool.

Neros Technologies Establishes UK Subsidiary as Swindon Drone Cluster Grows — US-based FPV drone manufacturer Neros Technologies announced on 3 March the launch of Neros Technologies UK Ltd, with a headquarters in Swindon and up to £10 million in investment over five years. The subsidiary will manufacture Neros's Archer strike FPV drones domestically for the UK Armed Forces and European allies. Neros has already delivered systems to the MOD through the International Drone Capability Coalition. The company becomes the fifth military drone manufacturer in Swindon, alongside Stark, Tekever, DSEI Flyby and Munin Dynamics.

What matters: Swindon is quietly becoming one of Europe's most concentrated military drone manufacturing clusters. Neros brings a China-free supply chain and operational experience from Ukraine — its Kyiv office gives it a direct feedback loop from the front line. For companies in the drone supply chain, proximity to this cluster may increasingly matter.

UK Reveals Military Maintenance Facilities in Ukraine — On 7 March, the MOD disclosed for the first time that the UK is operating military maintenance facilities inside Ukraine — a significant step in the UK's support posture that moves beyond equipment supply into in-country sustainment.

What matters: This signals a deepening UK commitment to Ukraine's long-term defence capability and creates potential precedents for how the UK structures industrial support to partner nations in contested environments.