Unmanned Systems

A once-in-a-generation shift in UK defence spending is creating substantial new procurement and investment opportunities across the unmanned vehicles sector. For economic development practitioners whether working with Combined Authorities, investment promotion agencies or business support organisations understanding where the money will flow and which companies are positioned to win it has become a strategic priority.

Mickledore has worked with a number of organisations to better understand the investment opportunity.

The Financial Backdrop

The numbers are significant. The UK is raising defence spending to 2.5% of GDP by 2027, with an ambition to reach 3% in the following Parliament. The government has committed £4 billion specifically for autonomous systems this Parliament, with more than £2 billion drawn from the defence spending uplift. Crucially, the 2025 Strategic Defence Review (SDR) now mandates that at least 10% of the MoD's entire equipment procurement budget must be spent annually on novel technologies, including uncrewed and autonomous systems and AI-enabled capabilities. With the equipment budget running at approximately £11 billion per year over £1 billion annually that is a floor, not a ceiling.

The September 2025 Defence Industrial Strategy is equally explicit in framing this as an economic as well as a military programme, with the government committing to a Defence Exports Office and a £400 million Defence Innovation Fund to support UK businesses into the supply chain.

The Procurement Pipeline: What's Coming

The SDR's new procurement model is itself a structural opportunity. Platforms are to be contracted within two years of a defined requirement, modular upgrades within one year, and off-the-shelf commercial solutions within three months. This pace, unprecedented in UK defence, opens the market to agile SMEs that could never have competed under the old equipment programme model.

The key forthcoming programmes across the three domains are:

Air. The most significant near-term competition is for Autonomous Collaborative Platforms (ACPs) expendable combat drones designed to fly alongside crewed aircraft, absorbing risk and extending strike reach. This is a major programme with no incumbent. The HAPS (High-Altitude Pseudo-Satellite) scale-up under Project Aether is also moving, with BAE Systems' PHASA-35 and Airbus' Zephyr competing for stratospheric ISR contracts. At the tactical end, procurement of one-way attack drones is already underway and is likely to grow substantially, following contracts such as Project Asgard (£4.5 million to Modini for Dart 250 drones in February 2025) and the ongoing supply to Ukraine via the RAF's StormShroud programme.

Land. The Army's Task Force RAPSTONE is the front door for UGV procurement and has already issued initial contracts. The next phase, large-scale procurement for logistics and combat roles, is expected to follow on from the results of experimentation in the Robotic Platoon Vehicle (RPV) programme and the Advanced Warfighting Experiment series. The 20-40-40 doctrine (20% crewed platforms, 40% reusable drones, and 40% consumable effectors) signals that UGV procurement will be extensive and sustained.

Maritime. Project Beehive has awarded its first contract (20 USVs to Kraken Technology Group) but explicitly frames it as a proving ground for a much larger Hybrid Navy fleet. The Royal Navy's declared ambition to become a dispersed, digitally connected force of crewed and uncrewed platforms implies a long-term procurement programme at scale. Separately, the MoD issued a £27.3 million contract in May 2025 for an ocean-going uncrewed survey vessel. The SDR's Atlantic Bastion concept for North Atlantic security implies further substantial investment in long-endurance unmanned maritime systems.

The Defence Uncrewed Systems Centre, due to reach initial operating capability in 2026, will be the focal point for industry engagement across all three domains, a single point of contact that procurement-active companies should engage with now.

Where Investment Is Landing

The geography of investment is already becoming clear, though not yet fixed.

Swindon has emerged as the UK's leading drone manufacturing location. TEKEVER's announcement of a 254,000 sq ft production facility, the largest drone factory in the UK, scheduled to open in 2026 is the centrepiece. This is the core of a £400 million investment programme that will create 1,000 skilled jobs. TEKEVER already supplies the RAF's StormShroud drone and has sold approximately £270 million of drones to Ukraine via the MoD. STARK (a UK-German manufacturer) and Munin Dynamics already operate in the town.

Hampshire and the south coast are home to Kraken Technology Group (Fareham), which beat BAE Systems, Kongsberg and L3Harris to win the Project Beehive USV contract, a landmark result for a British SME. QinetiQ (Farnborough) is embedded across multiple programmes from Banshee attack drones to Project Vampire. Windracers (Southampton) is developing heavy-lift logistics drones with Royal Navy funding. ACUA Ocean (Plymouth-led) has government backing to develop a 43-metre multi-role uncrewed surface vessel.

BAE Systems, with major sites across the UK. is the dominant prime and is actively acquiring specialist drone companies (Prismatic, Malloy Aeronautics, Callen-Lenz) to position for the ACP competition and GCAP-related programmes.

ARX Robotics UK is investing £45 million in manufacturing capacity for up to 1,800 ground robots annually in SW England, following its first British Army contract through RAPSTONE.

Anduril, the US defence tech firm, has announced plans to open a UK factory following a £30 million MoD contract, adding to the inward investment picture.

The Opportunity for Economic Development Practitioners

Several implications follow for those working on place-based economic development:

Cluster formation is the primary lever. Swindon's emergence resulted from the convergence of available industrial space, proximity to test facilities, political intent, and a critical mass of related companies. Other localities, particularly those with aviation, precision engineering or marine heritage, have further potential to assess their cluster potential.

Supply chain entry points are broader than they appear. Composites, electronics assembly, precision machined components, battery technology and ground support equipment all represent accessible entry points for existing manufacturers with transferable skills, well beyond the prime contractor tier.

Test and certification infrastructure creates pull. TEKEVER's acquisition of West Wales Airport for UAV testing, and the RAF's investment in Waddington as a global training hub, demonstrate how infrastructure investment anchors industrial clusters.

Speed is now the differentiator. The MoD's new procurement timelines reward agile companies over incumbents. SMEs that can demonstrate rapid iteration, proven performance and UK manufacturing capability are now genuinely competitive.

The age of the drone is not coming. It is here and the contracts are beginning to flow.

If you are interested in examining the businesses involved in unmanned supply chains, the geographic focus of activity or any aspect of investment potential arising from the increased emphasis on defence in the UK economy, contact Nigel Wilcock, Mickledore at nwilcock@regionaldevelopment.co.uk