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United Kingdom Defence and Security Report Q3 2008

http://www.companiesandmarkets.com/Summary-Market-Report/united-kingdom-defence-and-security-report-q3-2008-49542.asp


Report Summary

Almost half the members of the British armed forces regularly consider resigning, a survey carried out by the Ministry of Defence indicated in July. The high percentage – 47% of a sample of 9,000 soldiers and sailors surveyed – was attributed to the hardship of the Iraq and Afghanistan wars, poor equipment, low pay, and the high frequency of foreign tours of duty. The MoD acknowledged that there were ‘areas of concern’ but argued that conditions were improving. In June army commander General Richard Dannatt had complained over low pay for troops, saying that soldiers were paid less than traffic wardens. Defence minister Derek Twigg said that since the survey had been conducted there had been ‘a number of important changes’ for the country’s 186,440 service personnel. The largest British overseas contingent is in Afghanistan where troop numbers have risen to an expected 8,000 by the end of this year. British deaths in Afghan fighting now exceed 110. The UK contingent in Iraq, where 176 UK soldiers have died stands around 4,000. A number of senior officers had expressed concern over the strains of fighting in two overseas wars simultaneously. In June the Chief of the Defence Staff Jock Stirrup said ‘we are not structured to do two of these things on this scale on an enduring basis, but we have been doing it on an enduring basis for years’. That meant being ‘stretched beyond the capabilities we have’. There are currently no major conventional military threats to the UK. However, the country’s fear of an international terrorist attack remains high; before the mid-2007 scare provoked by failed attacks in London and Glasgow, memories remain fixed on July 7 2005, when four bombs were detonated across London’s transport system. A similar attack was launched two weeks later but the bombs failed to explode, signalling the organisation’s commitment to continue its campaign on British soil. The defence industry is benefiting from a range of multinational programmes and major procurement projects within the UK. Rationalisation and internationalisation of the industry continue, and the announcement of an agreement over the second tranche of the Eurofighter’s Typhoon is good news for the British defence industry and employment levels generally. So too is confirmation of the order for two new 65,000-tonne aircraft carriers, which will be the largest warships ever built in the UK. The MoD also made a large number of procurements during 2006-2007, reflecting the UK’s continued commitment to the US-led war on terror. Plans to restructure the defence industry to meet the long-term needs of the armed forces could lead to the UK becoming less sensitive to where platforms and systems are built. Involvement in multinational programmes is expected to increase UK arms exports over coming years. These projects should enable UK firms to gain defence contracts for the supply of components, subsystems and structures. Regardless of the strength of the UK defence industry, there are perpetual reports that the British armed forces deployed in Iraq and Afghanistan are inadequately equipped – as such, a significant domestic demand exists should the funds be found.

Table of Contents

Executive Summary .5

SWOT Analysis .6

United Kingdom Political SWOT 6

United Kingdom Security SWOT . 7

United Kingdom Defence Industry SWOT ... 8

United Kingdom Economic SWOT ..... 9

Political Overview ...10

Domestic Politics .. 10

Security Risk Analysis ..14

BMI’s Security Ratings 14

Table: Europe Security Ratings 14

Table: Europe State Vulnerability To Terrorism Index . 15

Regional Security: Europe .. 16

Overview 16

Internal Terrorism 16

Criminal Activities 19

UK – Security Risk Ratings ..... 19

UK – Conflict Risk 20

UK – Terrorism Risk ...... 20

UK – Physical Safety Risk 21

Security Overview .....22

Internal Threats 22

Domestic Terrorism 22

Northern Ireland ... 22

Table: Proscribed Irish Groups 22

Table: United Kingdom Insurgent Groups 23

Latest Developments .. 24

Timeline: Internal Threats ...... 25

External Threats . 27

WMD Fears . 28

Drug Trafficking ... 29

International Terrorism . 29

Table: Proscribed International Groups ... 29

Latest Developments ...... 30

External Security: Recent Developments .. 31

Military Structure And Defence Industry ......33

Armed Forces 33

Table: Regional Armed Forces (including conscripted) 20 33

Defence Reform 33

International Deployments ...... 36

Table: Principal Deployments Of The British Armed Forces: ... 36

Weapons Of Mass Destruction 37

Market Structure 38

Arms Trade Overview 38

Exports 38

Imports 39

Industry Trends And Developments . 40
Table: UK Defence Sector: Key Players ... 40
Background 41
Procurement Trends And Developments . 44
Latest Developments ...... 44
Timeline: Procurement .. 46
Industry Forecast Scenario .48
Army Enlargements . 48
Table: Army Enlargements ..... 48
Government Expenditure On Defence Industry .. 49
Table: Government Expenditure On Defence Industry . 49
Key Risks To BMI’s Forecast Scenario ..... 50
Macroeconomic Forecast .52
Table: United Kingdom - Macroeconomic Forecasts . 55
Company Profiles .....56
BAE Systems 56
GKN .... 59
QinetiQ .. 62
Rolls Royce 64
BMI Forecast Modelling 67
How We Generate Our Industry Forecasts . 67
Defence Industry ... 67
Sources .... 68