UK to become 'defence industrial superpower', finance minister says

LONDON (Reuters) - Britain's finance minister Rachel Reeves said she wanted the country to become a "defence industrial superpower" as she pumped an extra 2.2 billion pounds ($2.8 billion) into the sector in her budget update on Wednesday.

Reflecting heightened geopolitical tension and U.S. President Donald Trump's calls for Europe to do more to protect its own security, Reeves said she would focus on new technology and innovation to drive the country's defence industry.

Under new plans, 10% of the government's defence equipment budget would be spent on new technologies, she said, with a focus on drones and AI, while small companies would be given better access to defence contracts in a reform of what she called a "broken" procurement system.

The government is also setting aside 400 million pounds to be spent on UK defence innovation to bring new technology to the frontline more quickly, she said.

Reeves referenced defence throughout her speech, calling the extra cash for the sector vital in a "a more insecure world", and adding that the investment would help the wider economy.

"This additional investment is not just about increasing our national security but increasing our economic security, too. As defence spending rises, I want the whole country to feel the benefits," she said.

Prime Minister Keir Starmer last month committed to lift defence spending to 2.5% of GDP by 2027, the biggest increase in the budget since the end of the Cold War, and said Britain will aim to spend 3% of its GDP on defence in the next parliament.

($1 = 0.7759 pounds)

(Reporting by Sarah Young, Editing by Paul Sandle)