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United Kingdom Defence and Security Report Q4 2010

The United Kingdom Defence and Security Report provides industry professionals and strategists, corporate analysts, defence and security associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the United Kingdom's defence and security industry.

A September 2010 article in the Telegraph by Professor Michael Clarke, director of the Royal United Services Institute, suggested that Britain’s external security outlook is more uncertain than it has been for 75 years. Clarke cited several reason for this perceived, precarious position, most importantly the US’s shifting priorities, China’s global rise and the dynamics of that country’s relationship with India. Meanwhile, security threats in Europe, while much reduced, remain. Britain would have to work closely with other leading European powers, most notably France and Germany, in any future intervention in the region, whilst simultaneously contending with Russia’s attempts to re-establish influence in the region. At the time of research, the UK was undertaking a large-scale Strategic Defence and Security Review, launched soon after the coalition government took office in May 2010. On September 17, the government’s new National Security Council (NSC), chaired by Prime Minister David Cameron, will start discussing the review’s findings with a view to making substantial cuts to the defence budget in line with the coalition’s deficit-reduction programme.

The implications for Britain’s armed forces, and its defence industry, are very serious indeed. The previous Labour government committed the UK to several highly expensive overseas conflicts, most notably in Iraq and Afghanistan, but also in Kosovo and Sierra Leone, but, according to many analysts, did not provide the funding required fully to support these operations, causing the armed forces’ support for the operations to become highly stretched. Perhaps more damning is the accusation that Labour built up an “unfunded liability“ in defence of GBP37bn over the next decade, including GBP20bn of vaguely budgeted equipment orders. Out of this perceived chaos, the new government is struggling to bring order. Despite the new government’s commitment to British presence in Afghanistan, as well as the renewal of the country’s Trident nuclear submarines, estimated at between GBP20bn and as high as GBP100bn by various sources, defence is almost certain to be one of the areas hit hardest by budget cuts. The Economist estimates that defence “faces a cumulative squeeze” of 10-20% over the next five years.

The cuts are already having an impact on the arms industry, In September 2010, defence giant BAE announced 946 job cuts in the UK, as reported by The Guardian in that month. BAE said that it would be focusing redundancies on its warplane division, but that shipbuilding operations could also be hit hard due to cuts in naval spending.

The analyst expects the overall number of military personnel to be cut significantly, from 157,090 in 2010 to 150,900 in 2014. We forecast that British defence expenditure will shrink as a proportion of GDP from 2.49% in 2010 to 2.37% in 2014, as defence cuts bite. However, in cash terms, expenditure will rise from GBP35.56bn to GBP39.15bn. A revision in these figures may be necessary after the coalition government has made decisions on defence policy, following the strategic defence and security review.
Executive Summary

SWOT Analysis
United Kingdom Security SWOT
United Kingdom Defence Industry SWOT
UK Political SWOT
UK Economic SWOT
UK Broadband Sector SWOT

Global Political Outlook
Global Hotspots
Table: Election Timetable, H210-2011
United States: Obama To Be Tested By Mid-Term Elections
Latin America: Beyond Lula
Western Europe: All About Austerity
Central Europe: New Governments To Be Tested
South-East Europe: Turkey's Ongoing Evolution
Russia and the Former Soviet Union: Focus On Security
Middle East: On-going Challenges
Sub-Saharan Africa: The Election Conundrum
Asia: The Usual Risks Prevail
Wild Cards To Watch

European Regional Security Overview

Political Overview
Domestic Politics
Foreign Policy
Long-Term Political Outlook

Security Risk Ratings
BMI’s Security Ratings
Table: Europe Security Risk Ratings
Table: Europe State Terrorism Vulnerability To Terrorism Index

The UK’s Security Risk Ratings
City Terrorism Rating
Table: BMI’s Western Europe City Terrorism Index

Domestic Security Overview
Internal Threats
Domestic Terrorism
Northern Ireland
Table: Proscribed Irish Groups
Table: United Kingdom Insurgent Groups

Latest Developments
Timeline: Internal Threats
External Threats
WMD Fears
Drug Trafficking
International Terrorism
Table: Proscribed International Groups
Latest Developments
External Security: Recent Developments

Armed Forces and Government Spending
Military Structure and Defence Industry
Armed Forces
Table: Western European Armed Forces, 2010
Defence Reform
Enduring Peace Support Operations
Intervention against State Adversaries
Routine Deployments
International Deployments
Table: Principal Deployments Of UK Armed Forces
Weapons of Mass Destruction

Market Overview
Arms Trade Overview

Industry Trends And Developments
Table: Key Players In The UK’s Defence Sector
Timeline: UK Government Procurement

Industry Forecast Scenario
Armed Forces
Table: UK Armed Forces, 2007-2014 (‘000 personnel)
Government Defence Expenditure
Table: Government Expenditure On Defence Industry, 2007-2014

Key Risks To BMI’s Forecast Scenario
Macroeconomic Outlook
United Kingdom – Economic Activity

Company Profiles
BAE Systems

Country Snapshot: UK Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market and Spending Power
Table: Employment Indicators, 2000-2005
Table: Consumer Expenditure, 2000-2011 (US$)
Table: Average Annual Wages, 2000-2012

How We Generate Our Industry Forecasts
Defence Industry
City Terrorism Rating
Table: Methodology
Companies Mentioned
- BAE Systems


- QinetiQ

- Rolls-Royce
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