UK’s new missile deal could change the war in Ukraine—And boost British industry

The UK government has approved a £1.6 billion military contract to supply 5,000 air defence missiles to Ukraine, reinforcing its defence against Russian air strikes. The deal is expected to enhance Ukraine’s ability to counter drone and missile threats, providing advanced lightweight multirole missiles (LMMs) designed for rapid deployment and precision targeting.

These missiles, manufactured by Thales in Belfast, have already demonstrated high effectiveness in protecting critical infrastructure. The latest contract builds on a previous £162 million agreement under which 650 LMM missiles were delivered to Ukraine in December 2024. With this new deal, production will be scaled up significantly, allowing continuous replenishment of Ukraine’s defence stocks.

Ukraine’s defence industry will also play a role, as a Ukrainian industry partner is set to manufacture launchers and command-and-control vehicles. This collaboration strengthens Ukraine’s self-sufficiency in military production while ensuring rapid deployment of additional air defence systems.

What Impact Does This Defence Deal Have on the UK Economy?

The contract provides a major boost to the UK’s defence sector, creating 200 new jobs and supporting 700 existing positions at Thales in Belfast. With production of air defence missiles expected to triple, the wider Thales supply chain across the UK will also benefit from increased manufacturing activity.

This deal aligns with the UK government’s broader defence spending strategy, which includes plans to increase military expenditure to 2.5% of GDP by April 2027, with a long-term ambition of reaching 3% in the next parliament. The objective is to translate defence spending into economic growth, ensuring that investments in security also generate jobs, strengthen domestic manufacturing, and foster technological innovation.

By leveraging UK Export Finance (UKEF), which has extended £3.5 billion in export credit to Ukraine, British defence companies are positioned to expand their international reach. This financing mechanism not only supports Ukraine’s security but also fuels the UK’s industrial base, reinforcing its role as a global defence supplier.

Why Is the UK Increasing Military Support to Ukraine?

The UK has been among Ukraine’s most consistent military supporters, committing £3 billion annually to assist in countering Russian aggression. This latest contract is part of a broader £4.5 billion package, which includes additional financing generated from interest on seized Russian assets.

The strategy behind this sustained support is to ensure Ukraine’s long-term security, preventing further escalations and deterring future conflicts. The effectiveness of the lightweight multirole missiles in defending Ukrainian cities and military installations has underscored the need for continued investment in high-precision air defence systems.

Alongside military aid, the UK has engaged in strategic defence collaborations with Ukraine, including the 100-Year Partnership Agreement, which focuses on restoring and modernising Ukraine’s defence industrial base. These efforts are intended to secure Ukraine’s self-sufficiency in arms production, reducing its dependence on external suppliers over time.

How Will the Missile Contract Strengthen UK Defence Manufacturing?

The agreement represents the largest missile production contract ever awarded to Thales in Belfast, solidifying its role as a key player in the UK’s defence manufacturing landscape. With the Defence Equipment & Support (DE&S) procurement arm managing the contract, the UK is demonstrating its ability to rapidly scale up weapons production in response to geopolitical challenges.

Experts within the defence sector emphasize that expanding domestic military production not only secures national defence interests but also enhances economic resilience. As global demand for advanced air defence systems increases, the UK defence industry is well-positioned to capitalize on export opportunities, strengthening its strategic partnerships with allied nations.

The deal is also a significant milestone for UK defence procurement, marking the beginning of a series of large-scale projects under the MOD’s Taskforce HIRST initiative. This task force is focused on building long-term industrial partnerships with Ukraine, ensuring that British defence firms remain at the forefront of military technology innovation.

What Are the Strategic Implications of This Missile Agreement?

The timing of the deal is crucial, coming as Ukraine faces intensified Russian missile and drone attacks. By rapidly increasing the production of air defence missiles, the UK is reinforcing Ukraine’s ability to sustain defensive operations while also sending a strong geopolitical signal of continued Western support.

Defence analysts highlight that ensuring Ukraine’s military resilience is essential not only for its own security but also for stability across Europe. As the UK strengthens its defence collaborations with key allies, the focus remains on ensuring long-term deterrence against hostile threats.

The broader economic and security implications of the agreement also extend to the UK itself. Increased investment in military technology is expected to drive innovation, create new jobs, and reinforce supply chain resilience, ensuring that the UK remains a global leader in defence manufacturing.

With defence spending poised for further growth, stakeholders within the UK defence sector anticipate additional contract opportunities, further boosting the industry’s long-term economic and strategic value.

A Strategic Step for UK-Ukraine Defence Cooperation

The £1.6 billion missile contract represents a pivotal expansion of UK-Ukraine defence cooperation, ensuring Ukraine’s continued military resilience while simultaneously strengthening the UK’s domestic defence industry. By securing a long-term partnership in air defence technology, both nations stand to benefit from increased economic stability, military innovation, and enhanced security capabilities.

As production at Thales in Belfast scales up, the UK is reinforcing its position as a key defence exporter, ensuring that Ukraine remains well-equipped while driving job creation and technological advancements at home. With future investments in UK defence spending set to rise, this deal serves as a foundation for sustained growth and global military collaboration.