While behind-the-scenes wrangling on the final details of the latest Strategic Defence Review continue, the overall message is crystal clear: the UK intends to significantly increase military spending. To enable this there have already been a number of government decisions designed to make funds available, in particular, for new weapons technology and programmes.
In November, the Defence Secretary announced he was cutting a number of ‘outdated’ military programmes (including the infamous Watchkeeper drone) to make funds available for new military technology. The Chief of the Defence Staff, Admiral Tony Radakin argued that “accelerating the disposal of legacy equipment is the logical approach to focus on the transition to new capabilities that better reflect changing technology and tactics.”
In a more ambitious money grab, PM Kier Starmer announced that he was cutting the UK’s aid budget to help increase military spending to 2.5% of GDP and said he would use the released funds to “accelerate the adoption of cutting-edge capabilities.” Starmer argued that the aid cuts would mean an extra £13.4bn military spending per year from 2027. Others, however, argued that in real terms, the increase would be around £6bn per year. Many noted that whatever the boost to UK military spending, the cuts would significantly harm the worlds poorest people.
Finally, there has been a concerted effort to ensure that banks, pension funds and other big investors – who have accepted that military companies should be excluded from ethical investment portfolios – get back in line and ensure that military companies have full access to all their funds. The government it seems, is adamant that private as well as public funds are made available to such companies. Not unrelated to this move, universities are also coming under pressure to crackdown on opposition to military company recruitment on campus.
Which drones companies are likely to benefit?
A number of newer and older military companies are likely to benefit from the coming increase in military spending and, in anticipation, we have seen a surge in the stock prices of many of the companies involved. While drones and related technology are only one part of the increase in military spending, a number of companies in this area are likely to benefit.
Helsing
Helsing is a new company set-up by three AI experts in Berlin in 2021. Its website states that it was “founded to put ethics at the core of defence technology development” and insists that ”artificial intelligence will be the key capability to keep liberal democracies from harm”
One of the company’s first products is the HX-2 attack drone. HX-2 is a meter long, electrically propelled X-wing, one-way attack drone with up to 100 km range. The company says that on-board AI enables it to resist jamming and that multiple HX-2 can be assembled into swarms. The drone has been designed to be mass-producible and Helsing announced in February 2025 that It had set-up the first of what it is calling its ‘resilience factories’ in southern Germany to mass produce 6,000 of the drones for Ukraine. Jane’s reported in December 2024 that Helsing was to set up a factory in the UK and it is highly likely that the UK will order the HX-2 drone.
Anduril
Although a little older than Helsing, Anduril too is a relatively new player to the defence industry. Co-founded in 2017 by technology entrepreneur Palmer Luckey, the company (named after a sword in Lord of the Rings) and its co-founder have been subject to an extra-ordinary amount of adulatory media coverage.
The UK has already awarded Anduril a number of contracts including a £30m deal in March 2025 to supply the Altius 600m and Altius 700m drones to Ukraine and it too announced this week plans to open a drone factory in the UK. Anduril is one of two companies left in the competition to supply the US air force with new category of drone called Collaborative Combat Aircraft (CCA). The UK too wants to acquire these type of drones to work in conjunction with its F-35 fighter aircraft and future Tempest combat aircraft. Anduril also works closely with another US AI tech company, Palantir, in development of AI-enabled intelligence and ‘battle-management’ systems similar in vein to the Israel ‘Lavender’ and ‘Gospel’ systems. This too is an area that the UK is likely to want to fund.
BAE Systems
The opposite of a newcomer, BAE Systems has a long history of being the main beneficiary of UK military spending. Research by CAAT showed that between 2012 and 2023, the company had more meetings with British prime ministers than any other private company.
With a track record of being involved with the development of drones including the UK’s experimental Taranis combat drone, BAE Systems is keen to position itself at the forefront of development of uncrewed autonomous systems. It has showcased its designs for the UK’s Autonomous Collaborative Platforms (ACP) programme – the UK’s equivalent to the US Collaborative Combat Aircraft (CCA) – and it continue to trial is Phasa-35 High-altitude surveillance drones.
Alongside this, BAE has quietly bought up a number of smaller, niche military drone companies to acquire new designs and expertise from those companies – including Prismatic, Malloy Aeronautics and Callen-Lenz – and has signed an agreement with QinetiQ to collaborate on the development of drone technology.
QinetiQ
Founded in scandal, military science and technology company, QinetiQ, is leading on a number of UAV and AI programmes and a key participant in others.
Banshee, for example, is a decades-old series of naval target drones, that was modernised and updated in 2014 to a twin-engine jet version. Under a Taskforce Kindred programme – the MoD unit established to identify equipment and stocks to supply to Ukraine – Banshee 80+ has been weaponised and adapted to become a ‘one-way attack’ drone. Images from Ukraine show that the drone with a 15kg warhead. These are likely to have been the “hundreds of new long-range attack drones” that Rishi Sunak announced would be supplied Ukraine amidst much confusion in May 2023. Banshee was also mentioned in the MoD’s Autonomous Collaborative Platform Strategy as a potential system for that programme.
QinetiQ are also working on the Jackdaw ‘disposable’ drone, clearly designed to fulfil the lower/middle end of the UK’s Autonomous Collaborative Platform proposal.
Baykar
Turkish company Baykar has hit the big time through its development of the Bayraktar TB2 armed drone. Since developing the drone a decade ago, the company has become the largest producer and exporter of MALE armed drones and has begun to produce and sell a larger version called Akinci. The company, owned by Turkey’s President Recep Erdoğan’s son-in-law, is ambitious and has received significant attention due to its meteoric rise in the drone industry with UK MoD officials arguing that the UK needs to ape the success of using ‘cheap drones’ like the TB-2
While there are no specific plans for the UK to acquire TB-2 drones, Baykar has moved to build on its success in exporting drones and recently bought out Piaggio Aerospace, the Italian small aircraft and UAV company. In addition, they signed a strategic partnership agreement with Leonardo, setting up a join-venture to produce drones. At the press conference on the new joint venture, the Baykar CEO noted that Italy and the UK are jointly producing their new combat fighter jet which and are planning to have loyal wingman type drones accompany it.
Others
There are a number of small companies looking to receive funding to develop and produce a variety of proposed drones and the government are keen to be seen to boost small and medium sized defence companies. Examples include Flybe Technology, a small company set up by ex-forces personnel in 2020. It has developed the Jackal drone and worked with Thales in trials funded by the RAF Capabilities Office to launch Thales Marlet missiles from the drone. The company has subsequently publicised other drones that it is seeking funding to develop, with its CEO and founder Jon Parker arguing in a recent interview “Jackal’s was today’s news it’ll be something else next week. We don’t care about the aeroplanes [it’s] the outcomes that we’re selling.”
Windracers argues that it “was conceived to provide essential logistical support to humanitarian agencies looking to sustain communities through emergencies where transportation links are poor.” While it has set up partnerships with humanitarian agencies, its drones have been sent via the MoD to Ukraine where they are being used to “supply essential security and defence logistics” and the company has won funding from MoD to take part in trials with Royal Navy.
Is the public persuaded?
Crucial to these plans, as a Financial Times op-ed argued at the end of 2024, is that the public are actually persuaded that a massive increase in military spending at the expense of other areas is necessary. And since the announcement – and in truth, long before – the government and advocates of increased military spending have worked assiduously to do just that. Time and time again we have been bombarded with messages about the threat from Russia, China, North Korea and Iran, insisting that without a vast increase in military spending, the UK is facing grave danger. Alongside the fear factor, the government are deploying the hoary old argument that increased military spending will boost the economy and create large amounts of jobs. This claim, however, has been debunked many times.
The government has publicly committed not to increase taxes on ‘working people’ and a February 2025 YouGov poll found strong opposition to increased taxes to pay for increased military spending (although its hard not to wonder what the polling results would show on support for a wealth tax instead of cutting aid and welfare spending).
Despite the significant pressure on the public to accept and support these changes, as health and welfare spending at home is syphoned off and cuts to the international aid budget begin to bite, it is highly likely that opposition to these developments will only grow.