United Kingdom Defence and Security Industry Update Quarter 2 2012

  • March 2014
  • -
  • Business Monitor International
  • -
  • 89 pages

Includes 3 FREE quarterly updates

With what has been largely judged to be a successful military intervention in Libya under the auspices of
NATO’s Operation Unified Protector under its belt, the United Kingdom’s armed forces are looking
ahead to the future.
While the UK Government has refused to be drawn on the exact date as to when the country’s armed
forces may vacate Afghanistan, a safe working hypothesis is the British presence in Afghanistan will end
by 2014 or 2015 at the very latest. Although still not officially acknowledged, Ministry of Defence
planning is now contemplating the strategic landscape beyond Afghanistan.

In reality this is no easy task. As events in Libya illustrated, a crisis requiring armed intervention can arise
without warning. Currently, the UK faces the possibility of a major civil conflict erupting in Syria, along
with the tense situation regarding Iran’s alleged nuclear weapons programme. Both Syria and Iran present
the Ministry of Defence with a vexing predicament. On the one hand, the present relationship between
Syria, Iran, the Western powers and the Arab League could be characterised as a heightened state of
tension. Nevertheless, at the time of writing (February 2012), a conflict involving outside powers against
either of these two countries remains unlikely.

That said, there is every potential that the situation in
either Iran or Syria could suddenly deteriorate, with Western and Arab military powers being forced to
intervene; either to evacuate foreign nationals, secure the delivery of humanitarian aid (in Syria’s case),
perform the supply of weapons to rebels opposing the rule of Syria’s President Bashir al-Assad, or to
begin air strikes against either country. Privately and openly, Parliamentarians, Ministry of Defence
officials, and service chiefs are asking whether the UK will be able to assist an intervention and ‘pull its
weight’ in any future military operations, whichever shape they may take.

To date, planning hypothesis s implicitly assumed a period of relative global stability following the UK’s
departure from Afghanistan. However, since the beginning of 2012, the UK has rarely faced such a
significant number of security challenges since the end of the Cold War. Not only is the wider situation in
the Middle East causing concern, but sabre-rattling in the South Atlantic by Argentina over the
sovereignty of the Falkland Islands is once again occurring. The year 2012 marks the 30th Anniversary of
Operation Corporate, the British military campaign of 1982 to liberate the islands following their invasion
by Argentina.

Buenos Aires has taken advantage of the anniversary by accusing London of performing an overt
militarisation of the South Atlantic following the deployment of a Type-45 Dauntless class air defence
destroyer to the region, and the arrival on the island of the Duke of Cambridge Prince William to serve a
tour of duty on the islands as a Royal Air Force search and rescue helicopter pilot. While for the short
term, a renewed shooting war between Argentina and the United Kingdom appears unlikely, the situation
in the South Atlantic can still be considered tense.

Closer to home, the Ministry of Defence will deploy thousands of military personnel in London to
safeguard the Olympic Games, which will be held in the capital, and around the country, in late July and
early August. The security operation will be significant, and could stretch British forces, particularly if
they are called upon to assist the response to any international contingency during the Games. At the
same time, the British armed forces are having to face what can only be considered a volatile international
situation while absorbing spending cuts, personnel reductions, and diminishing equipment levels. While
Britain’s armed forces have illustrated their ability in the past to ‘punch above their weight’ even when
budgets have been squeezed, the reduction of expenditure for all three services continues to cause
concerns throughout the country and among the UK’s European and NATO partners.

Table Of Contents

Executive Summary ..... 5
Industry SWOT Analysis . 7
UK Political Environment and Risk Analysis 7
UK Economic Environment and Risk Analysis ... 8
UK Business Environment SWOT .. 9
World Political Outlook ... 10
Landmark Political Events Looming In 2012 . 10
World Flashpoints: Eurozone, Syria, Iran, Afghanistan, Korean Peninsula . 10
Data : Election Timetable, 2012 .. 15
United States .. 19
Russia 19
China . 21
Wild Cards To Watch . 22
Europe Security Overview ..... 25
Europe In A World Context... 25
Europe's Key Security Issues Over The Coming Decade . 25
What If The Eurozone Collapses? Political Risks Assessed ... 31
Security Risk Analysis ..... 36
BMI’s Security Ratings .... 36
Data : Europe Security Risk Ratings . 36
Data : Europe State Terrorism Vulnerability To Terrorism Index ..... 37
Political Overview . 38
Scottish Independence Referendum: A Primer ..... 38
Regional Outlook . 42
Foreign Policy ..... 43
Domestic Security Overview . 48
Internal Threats .. 48
Domestic Terrorism ... 48
Northern Ireland .. 48
Data : Proscribed Irish Groups ... 48
Data : United Kingdom Insurgent Groups ..... 49
Latest Developments .. 50
Timeline: Internal Threats ..... 50
External Threats . 51
WMD Fears ... 53
Drug Trafficking .. 54
International Terrorism ... 54
Data : Proscribed International Groups .. 54
Latest Developments .. 56
Armed Forces And Government Spending . 58
Military Structure And Defence Market . 58
International Deployments ..... 63
Data : Principal Peacekeeping Deployments Of UK Armed Forces .. 64
Weapons Of Mass Destruction ..... 65

Industry Analysis ... 67
Arms Trade Overview 67
Industry Trends And Developments ... 70
Data : Key Players In The UK’s Defence Segment . 71
Timeline: UK Government Procurement.. 73

Market Projection Scenario ... 77
Armed Forces 77
Data : United Kingdom’s Armed Forces, from 2002 to 2008 (’000 personnel, unless otherwise stated) . 77
Data : United Kingdom’s Available Manpower For Military Services, from 2009 to 2016 (aged 16-49) 77
Government Defence Expenditure ..... 78
Data : United Kingdom’s Defence Expenditure, from 2009 to 2016 .. 79
Data : United Kingdom’s Defence Expenditure Scenario - Changing % Of Gross Domestic Product, from 2009 to 2016 (US$mn) 79
Defence Trade 80
Data : United Kingdom’s Defence Exports, from 2009 to 2016 (US$mn) 80
Data : United Kingdom’s Defence Imports, from 2009 to 2016 (US$mn) 81
Data : United Kingdom’s Defence Trade Balance, from 2009 to 2016 (US$mn) . 81
Key Risks To BMI’s Projection Scenario .... 81

Macroeconomic Data .. 82
Data : United Kingdom - Economic Activity, from 2011 to 2016 84
Company Profiles . 85
BAE Systems .. 85
GKN ... 87
QinetiQ .... 88
Rolls-Royce .... 89
Methodology ... 91
How We Generate Our Market Projections .... 91
Defence Market .. 91
Sources .... 92

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