Britain’s 2.5% Defence Pledge Won’t Fix the Real Problem

Earlier this year, the UK government reaffirmed its commitment to spend 2.5% of GDP on defence by 2027. On the surface, it’s a bold pledge — especially in an era of growing global instability and renewed threats on NATO’s eastern flank.

But in my view, this top-line number misses the point entirely.

The issue isn’t how much we spend. It’s how we spend it.

The UK’s defence procurement machine is outdated, bureaucratic, and still operating as if we’re building Cold War-era weapons for a Cold War-era battlefield. We pour billions into legacy defence contractors, accept projects that overrun by years and billions, and somehow act surprised when the results lag behind what’s actually needed.

Meanwhile, countries like Ukraine — under existential threat — are showing us a different way.

Ukraine: Start-Up Nation at War

Since the full-scale Russian invasion, Ukraine has had to innovate on a wartime timeline. They’ve pioneered low-cost, high-impact technologies — autonomous drones, real-time battlefield surveillance, rapid-deployment EW systems — with a start-up mentality.

Small, agile teams are building, testing, and deploying battlefield tech in weeks, not years.

They’re iterating based on real combat feedback. They’re using off-the-shelf components, open-source software, and commercial hardware. And they’re achieving meaningful results with budgets that wouldn’t even cover a UK project review meeting.

From my experience in embedded systems and AI, I can say with confidence: this model works. In fact, it’s the only model that can deliver field-relevant innovation fast enough to matter.

Britain’s Defence Procurement Model Is Broken

The UK continues to funnel enormous sums into a handful of massive primes — BAe Systems, Rolls-Royce Defence, Thales — with projects that stretch on for years with little transparency or flexibility.

Type 26 frigates. Ajax armoured vehicles. The Future Combat Air System. All multi-billion pound programmes. All plagued by delays, cost overruns, or shifting requirements.

This isn’t a criticism of the engineers working on these programmes — many of whom are world-class. It’s a criticism of the structure itself:

Monolithic contracts with limited accountability
Slow feedback loops and endless review cycles
Top-down requirements dictated years in advance, before the threat landscape even takes shape

It’s not innovation. It’s inertia.

We Need to Fund the Defence Start-Ups

The alternative is simple: distribute defence funding more broadly, targeting small, focused teams with deep technical expertise and an incentive to move fast.

Imagine allocating even 10% of that 2.5% GDP pledge toward small British defence technology firms—start-ups working on AI-driven drones, secure comms, counter-UAS systems, or battlefield intelligence platforms.

The benefits are obvious:

Faster development cycles — weeks or months, not years
Lower costs — fewer layers of overhead, less bureaucracy
Built-in agility — the ability to pivot based on battlefield feedback
Innovation from the edge — closer collaboration between engineers and end-users

At Obsidian Reach, for example, we’re developing remote AI camera systems for situational awareness. Lightweight, battery-efficient, and deployable anywhere. It’s a capability that would take a traditional contractor years to develop. We’re moving in months.

Now imagine 200 companies like us, each specialising in a niche but critical piece of the defence technology puzzle — all working in parallel, feeding innovation into a common mission.

How to Make It Happen

This isn’t a call to tear down legacy defence contractors overnight. They still have a role to play, especially in delivering strategic platforms.

But we need to rebalance the portfolio.

Here’s how:

Create a dedicated defence tech venture fund, backed by MoD, but run like a private investment firm — with rapid application cycles, milestone-based payouts, and tech-savvy advisors.
Fund pilot programmes with micro-budgets and clear, tactical goals — not blue-sky visions of 2040.
Mandate interoperability, so new products can integrate into larger systems without being locked into legacy architecture.
Reward results, not reports. If a start-up can build and demo a working prototype in 60 days, they should be funded to scale — not asked for another round of paperwork.

Final Thoughts: It’s Not About the Spend — It’s About the Strategy

Throwing 2.5% of GDP at defence is meaningless if it all disappears into decade-long contracts and PowerPoint decks.

Britain needs to adopt a start-up mindset for national security. One that funds speed, rewards focus, and embraces failure as part of iteration—not something to be buried under process.

In my experience, the future of defence lies not in building bigger systems — but in building smarter, more adaptive ones. And that means empowering the next generation of British defence innovators.

We don’t need more budget. We need more belief in what small, focused teams can do — when they’re given the mission, the money, and the freedom to build.