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For decades, defence spending sat largely outside Britain’s economic debate a necessary function of the state, but rarely a defining fiscal question. That era is ending.The emerging discussion is no longer just about moving core defence spending toward 3% of GDP. Increasingly, policymakers and strategists are considering whether the UK should move toward spending closer to 5% of GDP on defence and wider national security, reflecting a broader definition of security that includes resilience, infrastructure protection, cyber capability, and economic preparedness.At roughly £66 billion today around 2.3–2.4% of GDP the UK already spends above NATO’s baseline, with plans to rise to 2.5% by 2027. But a broader 5% framework would represent one of the largest structural reallocations of public resources in decades, potentially requiring tens of billions in additional annual spending once wider security investments are included.The strategic logic is increasingly clear. In a world of rising geopolitical risk, economic resilience and national security are becoming inseparable. But while the direction of travel is justified, the scale of the shift means difficult choices will shape government priorities, industrial strategy, and the wider economy for years to come.This is not simply a defence policy, it is a defining economic decision about what Britain chooses to prioritise._________________________________________________________________________________<h3>The industrial upside: reinforcing Britain’s strategic strengths</h3>Higher defence spending has the potential to reinforce some of the UK’s most competitive industries, particularly where long-term procurement supports innovation and high-skill employment.The Ministry of Defence already manages spending approaching £80 billion annually, with significant capital investment flowing into major programmes such as the Dreadnought nuclear submarine programme, expected to cost over £30 billion, and the Global Combat Air Programme (GCAP) the next-generation fighter jet initiative with Japan and Italy.The government’s long-term shipbuilding pipeline, alongside continued investment in naval capabilities, ensures sustained demand across maritime supply chains.These programmes provide decades-long investment certainty, supporting advanced manufacturing, engineering, and research-intensive industries that typically deliver strong productivity gains.Defence procurement is also increasingly innovation-led, with commitments to direct around 10% of the equipment budget toward emerging technologies, including AI, cyber, and autonomous systems.If aligned with industrial strategy, this spending can strengthen export capability and reinforce the UK’s position in high-value manufacturing sectors.<figure id="figure-k8i0pob6eomls2awq7"><img id="k8i0pob6eomls2awq7" src="https://media.gettyimages.com/id/814276192/photo/energy-and-power-icons-set-with-flag.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=XSdeZKxXeXMRQwAd2eT3OffmBVvksOawgSIkrDEx_OE=" alt="Energy and Power icons set with flag" title="Energy and Power icons set with flag" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9; object-position: center center;" data-corners="default" data-aspect="16:9" data-caption="" data-positionx="undefined" data-positiony="undefined" data-fullwidth="false" data-mce-src="https://media.gettyimages.com/id/814276192/photo/energy-and-power-icons-set-with-flag.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=XSdeZKxXeXMRQwAd2eT3OffmBVvksOawgSIkrDEx_OE=" data-mce-style="aspect-ratio: 16/9; object-position: center center;"></figure>_________________________________________________________________________________<h3>Regional growth: defence as place-based policy </h3>Defence investment has historically been one of the most powerful drivers of regional industrial activity.Shipbuilding in Scotland, aerospace in the South West, and advanced manufacturing across northern England anchor skilled jobs and supply chains that support local economies.A sustained increase in spending, particularly when broader resilience and infrastructure security investments are included could deepen these industrial clusters, supporting regional productivity and reinforcing efforts to rebalance the economy geographically.In effect, defence spending becomes a form of place-based economic policy creating long-term employment and investment outside London._________________________________________________________________________________&nbsp; <h3>Technology spillovers: innovation beyond defence </h3>Modern defence spending increasingly overlaps with frontier technologies.Investment in cyber capabilities, space systems, advanced materials, and digital infrastructure has the potential to generate spillovers across the wider economy, much as defence R&amp;D historically contributed to major technological breakthroughs.Across Europe, defence innovation spending is rising sharply, reflecting a broader shift toward technological competition between advanced economies.For the UK, this presents an opportunity to strengthen its technology ecosystem while supporting long-term productivity growth.&nbsp;_________________________________________________________________________________ <h3>Learning from Europe: a shared strategic shift </h3>The UK’s move toward higher defence spending mirrors a broader trend across advanced economies.Germany’s €100 billion special defence fund demonstrates how governments are treating defence as a strategic investment in industrial capability and resilience.Poland has gone further still, raising defence spending toward 4–5% of GDP, using increased budgets to expand domestic production and strengthen national resilience in response to geopolitical risk.The lesson from these countries is clear: higher defence spending can support growth and industrial capacity, but only when supported by disciplined fiscal planning and clear strategic priorities._________________________________________________________________________________<h3>The unavoidable trade-offs </h3>Even with strong economic and strategic justification, higher defence spending will inevitably reshape priorities across government.Recent spending plans already illustrate this dynamic. Overseas aid budgets have been reduced, while departments such as justice, local government, and environment face tighter settlements and slower spending growth.Transport and long-term infrastructure projects are particularly exposed to shifting priorities, with some major programmes facing delays or reduced funding as fiscal pressures intensify.These adjustments reflect a fundamental reality: expanding the security envelope does not simply increase public spending , it changes the balance of government priorities.<figure id="figure-rp0jkfoqfmls2c3te"><img id="rp0jkfoqfmls2c3te" src="https://media.gettyimages.com/id/931118392/photo/uk-and-eu.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=Vbccz1ZuxbBqXtVzZvr0rYrjUXxLU8xPZBkg0iUKmR8=" alt="UK and EU" title="UK and EU" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9; object-position: center center;" data-corners="default" data-aspect="16:9" data-caption="" data-positionx="undefined" data-positiony="undefined" data-fullwidth="false" data-mce-src="https://media.gettyimages.com/id/931118392/photo/uk-and-eu.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=Vbccz1ZuxbBqXtVzZvr0rYrjUXxLU8xPZBkg0iUKmR8=" data-mce-style="aspect-ratio: 16/9; object-position: center center;"></figure>_________________________________________________________________________________&nbsp; <h3>Fiscal credibility and the macroeconomic balance </h3>The broader economic impact will depend heavily on how increased spending is financed.With UK growth running at roughly 1% and public debt elevated, maintaining fiscal credibility will be essential to avoiding higher borrowing costs.Markets will closely watch whether higher spending is accompanied by credible fiscal planning, particularly as sustained increases reduce flexibility to respond to future economic shocks.For consumer-facing sectors, the impact may be indirect but meaningful if tighter fiscal policy slows disposable income growth.&nbsp;_________________________________________________________________________________<h3>A structural shift toward a security-led state </h3>The move toward a 5% framework reflects a deeper change in economic thinking.For much of the post-Cold War period, governments prioritised efficiency and social spending in a relatively stable geopolitical environment. Today, resilience, strategic autonomy, and economic security are becoming central policy objectives.Across NATO, defence budgets are rising rapidly, signalling a structural shift toward a more security-focused model of government spending.For the UK, this represents a recalibration of the state, one where defence and resilience play a larger role in shaping economic priorities._________________________________________________________________________________&nbsp; <h3>The critical question: investment or consumption? </h3>Ultimately, the long-term economic impact will depend on whether higher defence spending drives productivity and innovation.If spending supports high-skill employment, exports, technological development, and infrastructure resilience, it could strengthen the UK’s growth trajectory.If it primarily displaces other productive investment, it risks becoming largely consumptive spending that increases fiscal pressure without boosting economic potential.Execution will determine which path dominates._________________________________________________________________________________&nbsp; Winners and losers at a glance Likely winners:<ul><li>Defence and aerospace industries</li><li>Advanced manufacturing and engineering</li><li>Cyber, AI, and dual-use technology firms</li><li>Regional industrial economies</li><li>Energy and infrastructure resilience sectors </li></ul>Likely under pressure:<ul><li>Overseas aid and international development</li><li>Justice, local government, and environment budgets</li><li>Long-term infrastructure and transport investment</li><li>Consumer-facing sectors if fiscal policy tightens</li><li>Overall fiscal flexibility</li></ul>___________________________________________________________________________________________<h3>Conclusion: a necessary shift that demands discipline</h3>Moving toward spending closer to 5% of GDP on defence and national security reflects a changing world in which economic resilience and security are increasingly intertwined.Done well, it could reinforce Britain’s industrial base, support innovation, strengthen infrastructure resilience, and drive regional growth. Done poorly, it risks crowding out investment and narrowing fiscal flexibility.The experience of countries like Germany and Poland shows that higher security spending can support economic resilience but only when matched with clear strategy and fiscal discipline.For the UK, the opportunity is significant. But so is the responsibility to ensure that this shift strengthens not only national security, but the long-term foundations of economic growth.Because once spending priorities move at this scale, they shape the economy for decades.<figure id="figure-rf3hyys5a8mls2dvgd"><img id="rf3hyys5a8mls2dvgd" src="https://media.gettyimages.com/id/595098904/photo/united-kingdom-economy-and-financial-market-growth-concept-3d-rendering.jpg?b=1&s=2048x2048&w=0&k=20&c=F4xESVBCcSXZR7nf2TmCtMXmd4UqwOjhhiSBd41fvoA=" alt="United Kingdom economy and financial market growth concept, 3D rendering" title="United Kingdom economy and financial market growth concept, 3D rendering" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9; object-position: center center;" data-corners="default" data-aspect="16:9" data-caption="" data-positionX="undefined" data-positionY="undefined" data-fullWidth="false"/></figure>

Defence at 5%: Britain’s Strategic Investment and the Economic Choices It Demands

December 2025 marked a quiet but decisive moment for the UK’s transport transition. Battery electric vehicles accounted for one-third of all new car registrations, effectively meeting the 2026 Zero Emission Vehicle mandate a year early. Plug-in vehicles now consistently outperform internal combustion alternatives, and annual BEV volumes continue to grow at scale. The conclusion is unavoidable: demand is no longer the constraint. Electrification has moved beyond ambition and into execution. Yet history shows that transitions are not won at the point of adoption. They are won in how value is captured, industries are shaped, and strategic dependencies are managed. On that front, the hardest work is only just beginning. From our vantage point at Larkspur International, advising senior leaders across energy, mobility, and industrial strategy, a clear pattern is emerging. The UK’s success in driving EV uptake now exposes a deeper challenge: the country risks becoming an end market rather than a value creator unless the next phase is approached with equal clarity and resolve. Batteries sit at the centre of this challenge. While global battery capacity continues to expand rapidly, profitability remains under pressure and supply chains remain highly concentrated. Critical minerals, precursor materials, and advanced manufacturing capabilities are still dominated by a small number of geographies. Without a deliberate strategy to anchor battery value chains domestically and across Europe, electrification will increasingly rely on imported capability with long-term implications for competitiveness, resilience, and energy security. ZEV compliance alone will not solve this. Meeting regulatory targets is necessary, but it is not sufficient. The question facing industry and government alike is not whether EVs will dominate the fleet that outcome is now inevitable but who will control the technologies, infrastructure, and industrial know-how that underpin the system. This challenge is particularly visible in the commercial vehicle segment. While passenger EV adoption has accelerated, electric vans and fleets continue to lag expectations. The barrier is not consumer sentiment or product availability; it is operational certainty. Fleet operators require confidence in charging availability, residual values, financing structures, and total cost of ownership. Solving these demands integrated thinking across infrastructure, energy systems, capital markets, and operations not isolated policy interventions. At the same time, electrification is reshaping the power system itself. Transport demand is becoming an energy-system issue, and grid constraints, flexibility, storage, and smart charging will increasingly define the pace and economics of adoption. Treating energy and transport as separate domains is no longer viable. Competitive advantage will accrue to those who plan and invest across both. The UK has achieved something important. It has demonstrated that policy certainty, market mechanisms, and consumer readiness can align at scale. But this success now raises the stakes. The next phase of the transition will be harder, more capital-intensive, and more strategic. It will require difficult choices about industrial priorities, investment allocation, and long-term risk. Those choices will determine whether the UK simply consumes the technologies of electrification or helps shape and export them. This is the moment for leadership. At Larkspur International, we work with organisations that recognise this inflection point and are prepared to act decisively aligning strategy, capital, policy, and execution to build durable advantage in the electrified economy. For leaders grappling with battery industrialisation, energy-transport integration, commercial fleet transition, or long-term infrastructure strategy, now is the time to engage. The EV era has arrived. The real question is who will lead what comes next. If you are ready to move from compliance to competitiveness, we invite you to start that conversation with us.

The UK EV Transition Has Reached a Tipping Point and What Comes Next Will Define Who Leads

HM Revenue and Customs Government department in London

There is a comfortable myth in public-sector technology: that enough funding, applied at sufficient scale, will eventually modernise anything. HMRC’s current investment trajectory puts that belief to the test.With multi-billion-pound commitments across applications, infrastructure, and services over the next two years, HM Revenue &amp; Customs is positioning itself as one of the most significant technology buyers in Europe. The opportunity for the market is real and sizeable. But so is the risk that this becomes another expensive attempt to correct structural problems that money alone cannot resolve.What matters now is not how much HMRC plans to spend, but how intelligently it deploys procurement power and how honestly the supply market responds.<h3> </h3><h3>A Buyer With Scale and With Scar Tissue </h3>HMRC’s scale is often quoted, but rarely examined. Collecting more than £900bn annually and operating national tax, customs, and border systems means its technology estate is not merely large&nbsp; it is politically exposed, operationally brittle, and historically constrained.Decades of incremental outsourcing, platform layering, and contract-driven architecture have produced an estate that is expensive to run and hard to change. The current push toward cloud platforms, SaaS, data services, and AI is not optional modernisation; it is an attempt to restore manoeuvrability.Recent supplier engagement activity simply confirms what was already evident: HMRC is using procurement as a corrective instrument, not a neutral buying function.That distinction matters because corrective procurement is unforgiving.<h3> </h3><h3>The Opportunity Is Huge and Concentrated</h3>From a market perspective, HMRC’s forward pipeline is unusually clear.On the applications side, an estimated £2.3bn pipeline over the next 18–24 months is expected to flow into enterprise tax platforms, case and document management, integration and API layers, legacy modernisation, and AI-enabled data services. These are not peripheral tools; they sit at the operational heart of how tax is assessed, collected, and disputed.On infrastructure, the scale is even larger- approximately £3bn over two years, driven by data-centre exit, cloud migration, cyber security (including SIEM and assurance services), network modernisation, modern workplace services for over 60,000 staff, and a shift from traditional data warehousing to lakehouse architectures.Add to this professional services demand particularly for Borders and Trade delivery, large-scale transformation programmes, and delivery assurance and the picture becomes clear: HMRC is not buying experiments. It is re-platforming itself.For suppliers, this is a once-in-a-cycle opportunity. For HMRC, it is a moment where failure would be both expensive and visible.<h3> </h3><h3>Procurement Reform: Necessary, But Not a Silver Bullet </h3>HMRC’s growing use of flexible procurement approaches enabled by the Procurement Act is directionally right. Multi-stage competitions, dialogue, and funded innovation reduce the risk of locking into the wrong solution too early.But flexibility cuts both ways.The danger is not under-specification; it is over-optimism. Complex legacy transformation especially at HMRC’s scale has a habit of absorbing supplier enthusiasm and returning delivery reality. Flexible procurement must still converge on hard architectural decisions, enforceable commercial accountability, and credible exit strategies.Innovation-led routes, show promise. But pilots that scale cleanly remain the exception. The real test will be whether HMRC resists turning successful prototypes into bespoke solutions that recreate dependency under a different name.<h3>&nbsp; </h3><h3>SMEs: Opportunity or Instrument? </h3>Mandated SME participation targets and innovation pathways are often framed as progressive reform. In practice, they are also a hedge against concentration risk.HMRC’s insistence on 20–30% SME involvement on major contracts reflects a belief that monolithic supply chains are brittle. A more modular ecosystem spreads risk but increases coordination complexity.For SMEs, the opportunity is genuine but conditional. Financial resilience, security accreditation, tax compliance, accessibility, and delivery maturity are no longer optional thresholds. The romantic idea of the nimble disruptor does not survive contact with HMRC’s governance environment.For prime contractors, the challenge is sharper still: superficial SME inclusion will not withstand scrutiny. Partnership models will be judged on delivery substance, not bid narratives.<h3>&nbsp; </h3><h3>The Quiet Hardening of Non-Negotiables </h3>If there is one area where HMRC’s posture has hardened, it is around what cannot be traded off.UK data sovereignty, security assurance, accessibility compliance, and AI governance are now treated as entry conditions, not evaluation criteria. Suppliers who frame these as constraints on innovation are misreading the moment.This reflects institutional memory shaped by past failures across government, where innovation outran governance. HMRC appears determined not to repeat that mistake, even if it slows procurement or narrows supplier choice.That restraint deserves credit. It also raises the risk that the market focuses more on compliance theatre than on delivery capability.<h3>&nbsp; </h3><h3>What This Actually Means for Citizens </h3>For all the discussion of platforms, pipelines, and procurement reform, none of this matters unless it changes outcomes for citizens. People do not experience cloud migration; they experience tax codes, repayments, penalties, and disputes often at moments of financial stress.If HMRC’s £2.3bn investment in applications and data platforms is implemented well, citizens should see faster and more accurate decisions. Better integration between systems means fewer errors caused by mismatched data, fewer requests for the same information, and fewer cases stuck between departments. Automation, used properly, should reduce processing times for refunds, benefits adjustments, and compliance checks.For small businesses, the impact could be transformative. Modern case management and real-time data services should mean clearer visibility of liabilities, quicker resolution of queries, and fewer costly delays that quietly drain cashflow. In that sense, large-scale technology spend becomes an economic policy lever reducing friction in the system rather than simply enforcing it.The £3bn infrastructure investment matters here too. Resilient cloud platforms and modern networks are not abstract upgrades- they are what prevent system outages during filing deadlines, reduce service downtime, and allow HMRC staff to respond flexibly during crises. Citizens only notice infrastructure when it fails and that failure is disproportionately felt by those least able to absorb it.But the risks are equally real.Large transformations externalise their failures. Backlogs become the citizen’s problem. Poorly governed automation becomes unchallengeable decision-making. AI systems that cannot explain outcomes undermine trust particularly when decisions affect income, benefits, or penalties.Accessibility is another fault line. Digital-by-default services promise efficiency only if systems are genuinely inclusive. If modern platforms assume digital confidence, constant connectivity, or complex self-service journeys, then investment risks widening inequality rather than reducing it.Ultimately, citizens do not care whether HMRC buys “best-in-class” technology. They care whether it uses technology to be fairer, clearer, and more humane. Procurement decisions that privilege speed over accountability, or innovation over comprehension, will be felt far beyond government in household finances, business survival, and confidence in the tax system itself.This is the standard against which all this spending should be judged.<h3>&nbsp; </h3><h3>Social Value: Signal or Substance? </h3>Social value is now a material differentiator in HMRC competitions. In tightly scored procurements, it will influence outcomes.The risk is familiar: commitments that look strong on paper but sit orthogonally to delivery reality. HMRC’s preference for contract-specific, measurable outcomes is sensible but enforcing that discipline over multi-year programmes is harder than scoring it at bid stage.Suppliers should assume scrutiny will increase. HMRC should assume the same.<h3>&nbsp; </h3><h3>The Final Test: Can HMRC Buy Its Way Out of the Past? </h3>HMRC is about to discover something few public institutions ever test at this scale: whether a buyer with enough money, enough policy cover, and improving procurement tools can actually change the behaviour of its supply market rather than be reshaped by it.The danger is not that HMRC spends too little or moves too slowly. The danger is that it spends decisively, procures “correctly”, and still reproduces the same outcomes dependency, opacity, and fragile delivery under newer labels and cleaner architectures.Many of the suppliers best placed to win the next generation of contracts are also those that benefited most from the last. If transformation once again depends on proprietary platforms, asymmetric knowledge, and exit strategies that exist only on paper, then nothing fundamental has changed.The real question is not whether HMRC can modernise its systems. It almost certainly can.The question is whether it can change the power balance that has historically governed how government technology is delivered and whether the market is willing to meet a buyer that is trying to purchase independence rather than convenience.If this round of investment does not achieve that, then the problem was never funding, frameworks, or procurement law.

HMRC Is About to Spend Billions on Technology But Money Alone Won’t Fix the Problem

At Larkspur International, we operate across the sectors driving the UK’s future competitiveness- digital transformation, infrastructure, defence, telecoms, and healthcare and more. Following our discussions the direction is unmistakable: The UK wants to stabilise today, and lead tomorrow.Budget 2025 reflects that ambition. It balances fiscal responsibility with targeted investment in strategic industries, setting a clear path for Britain to act boldly on the global stage.For the UK this Budget provides clarity, opportunity, and a framework for long-term planning.<h3>A Clear Strategic Message: Stability First, Leadership Next</h3>The Government’s narrative is consistent: stability is the foundation, but leadership is the goal.Stability as the anchor<ul><li>Continued cost-of-living support</li><li>Commitment to cutting NHS waiting lists</li><li>No return to austerity</li><li>Stability rule met a year early</li></ul>A stronger partnership with businessThis Budget reinforces a commitment to work directly and openly with enterprise: “If you build here, Britain will back you.”For global companies, infrastructure providers, defence manufacturers, and healthcare suppliers, this represents a decisive shift toward predictability, partnership, and long-term policy certainty.A desire to lead, not followThe UK aims to occupy a leadership position in the global fields of automation, clean energy, defence modernisation, connectivity, and digital health.<h3>A Pragmatic Economic Outlook</h3>The OBR’s analysis presents a balanced but realistic picture:Growth &amp; Productivity:<ul><li>Real GDP growth steady at 1.5% across the forecast period.</li><li>Productivity downgraded to 1.0%- increasing the urgency for digital transformation and automation, areas central to Larkspur’s technology goals.</li><li>Inflation to return toward target only by 2027.</li></ul>Labour Market:<ul><li>Unemployment stabilising around 5% for several years.</li><li>Labour market strain from long-term sickness and demographic shifts.</li></ul>Public Finances:<ul><li>Debt stabilising at 96% of GDP, still historically high.</li><li>Borrowing falling to 1.9% of GDP by 2030–31.</li><li>Record 38% tax-to-GDP ratio, reinforcing the importance of efficiency and productivity across both private and public sectors.</li></ul>These conditions clarify the environment in which our clients will operate: stable but high-pressure, with productivity, digitisation, and innovation central to economic resilience.<h3>Where Investment Is Focused- and Why It Matters&nbsp;</h3>Public Services and Infrastructure:<ul><li>£33bn for public service capability</li><li>£18bn transport investment for England</li><li>Continued commitments to regional growth zones, including in Wales</li></ul>This creates a foundation for:<ul><li>demand for digital workflow transformation</li><li>scaling EV transport infrastructure</li><li>increased defence procurement certainty</li><li>improved connectivity corridors for telecoms operators</li><li>urgent modernisation of NHS systems and digital health models </li></ul><h3>Sector-Specific Implications&nbsp;</h3>1. Technology and Automation&nbsp;The Budget and OBR report both highlight the centrality of productivity to the UK’s future. That translates directly into increased demand for:<ul><li>AI-enabled decisioning</li><li>workflow automation</li><li>fraud and error reduction systems</li><li>digital identity infrastructure</li><li>integrated case management</li><li>low-code transformation across government departments </li></ul>The Government’s plan to raise £10bn through fraud and error reduction, alongside the rollout of Digital ID, will require exactly the kind of enterprise automation and workflow orchestration that platforms already deliver within the government.Public services under strain from the NHS to HMRC to local authorities, will increasingly adopt end-to-end automated platforms that deliver operational efficiency and citizen experience improvements.This Budget strengthens the UK's reliance on technology partners capable of delivering scale, resilience, and transformation at speed.2. Clean Transport and EV Charging&nbsp;The most consequential transport policy in a decade emerges here:A new mileage-based charge for EVs and hybrids from 2028.This provides:<ul><li>long-term policy stability</li><li>clear tax treatment of EV adoption</li><li>confidence for capital deployment models</li><li>enhanced justification for rapid charging expansion </li></ul>The Budget’s broader commitments- transport upgrades, regional economic growth zones, and decarbonisation alignment- create an environment where EV infrastructure will grow significantly across cities, motorways, and commercial hubs.This positions the UK as a high-confidence market for global charging operators.3. Defence and SecurityThe UK’s direction of travel in defence is unequivocal:Increased spending and clear long-term commitments:<ul><li>Strategic aim to reach 3.5% of GDP by 2035</li><li>Continued emphasis on sovereign industrial capability</li><li>A reinforced “buy British” procurement preference </li></ul>Demand will grow for:<ul><li>advanced systems and platforms</li><li>secure supply chains</li><li>dual-use technologies</li><li>cyber defence and intelligence tools</li><li>modernised digital command systems </li></ul>For defence suppliers, Budget 2025 offers certainty, demand visibility, and an investment climate aligned with UK capability growth.4. Telecoms and Digital InfrastructureThis Budget reinforces telecoms as the backbone of UK productivity and digital security:<ul><li>Digital ID and fraud prevention efforts require strong, secure networks</li><li>Regional growth zones drive new requirements for fibre and 5G rollout</li><li>AI adoption, automation, and remote service delivery create greater reliance on high-capacity connectivity</li><li>Public service reforms further drive demand for resilient communication systems </li></ul>Telecoms operators will find sustained opportunities in infrastructure expansion, government partnerships, and enterprise connectivity solutions.5. Healthcare, NHS and Med-Tech&nbsp;The Budget signals intensifying pressures but also clear opportunities:<ul><li>£300m for NHS technology investment</li><li>Expanded disability and welfare caseloads requiring modernised, integrated digital systems</li><li>Local government SEND deficits motivating service digitisation</li><li>Continued drive to reduce NHS waiting lists through productivity initiatives </li></ul>As a result, demand will rise for:<ul><li>digital patient pathways</li><li>workforce optimisation tools</li><li>case management</li><li>clinical workflow automation</li><li>telehealth and virtual care platforms </li></ul>Healthcare modernisation is no longer optional- it is mission critical.<h3>Social Policy Announcements: A Significant Shift in Welfare and Household Support</h3>Beyond economic stability and sectoral investment, Budget 2025 delivers one of the most consequential rounds of social policy reform in over a decade. These measures reflect a government intent on easing household pressures, reversing earlier austerity-era mechanisms, and reshaping the social safety net for a more resilient Britain.Ending the Two-Child Cap- A Major Structural ChangeThe most headline-grabbing announcement is the abolition of the two-child limit in Universal Credit and tax credits, a policy that has shaped the income landscape for hundreds of thousands of families since 2017.Key implications:<ul><li>560,000 families will benefit.</li><li>Average household support increases by £5,310 per year.</li><li>The reform carries a fiscal cost of £3bn by 2029–30.</li></ul>This move marks a decisive shift in welfare policy direction. It signals a broader recognition of the pressures facing families and an attempt to rebuild confidence in the social contract. It will reduce child poverty, rebalance financial strain on low- and middle-income households, and influence labour market participation, particularly for women and single parents.Reversals to Previous Benefit Cuts: A Signal of Social ReinvestmentThe Budget reverses several unpopular and high-impact welfare reductions, including:<ul><li>Restoration of winter fuel payments to previous eligibility levels.</li><li>Reinstatement of health-related benefits that had been subject to planned restrictions.</li></ul>Combined, these reversals cost £7bn by 2029–30 and reflect the Government’s intent to protect vulnerable groups amid enduring energy and cost-of-living pressures.Crucially, these decisions indicate a broader acknowledgement that households remain under financial stress, even as inflation recedes.Support for Disabled People and Rising Health-Related InactivityDisability and health-related welfare spending has surged since the pandemic. Rather than tightening eligibility, the Budget accommodates higher caseloads and invests in:<ul><li>improved assessment processes</li><li>more personalised support</li><li>better digital case management within DWP </li></ul>For technology providers, this environment will accelerate the adoption of automation, decisioning, and modern case handling systems to deal with the scale and complexity of claims.Local Authority Support and SEND ReformLocal authorities continue to face acute pressures, particularly around Special Educational Needs and Disabilities (SEND) provision.Key context:<ul><li>SEND deficits are forecast to reach £14bn once the statutory override ends in 2027–28.</li><li>The Government plans a future transition of full SEND costs to departmental budgets, significant for education and local service providers. </li></ul>This funding reality will likely drive:<ul><li>further digitisation</li><li>greater efficiency requirements</li><li>increased procurement of tech solutions </li><li>integrated service delivery models </li></ul>A Broader Vision of Social StabilityTaken together, these social policy measures represent a strategic reinvestment in the human side of the UK economy. The Budget acknowledges that securing long-term growth requires not only economic reform, but a stronger, more resilient population supported by modern public services.For sectors like healthcare, technology, financial services, retail, and logistics, a more stable and better-supported population translates into:<ul><li>more predictable consumer demand</li><li>improved workforce participation </li><li>reduced household volatility </li><li>increased capacity to retrain and upskill </li></ul>These reforms are not simply welfare changes, they are economic enablers, designed to underpin the UK's ambition to grow and compete globally.<h3>A Budget That Aligns With the Future Economy</h3>Across all industries in which Larkspur operates, one reality stands out:The UK is positioning itself to lead in high-value, innovation-heavy sectors and it is seeking private sector partners to deliver that vision.This Budget offers our clients:<ul><li>A more predictable policy environment </li><li>Strategic investment in infrastructure and innovation </li><li>Stronger demand for automation and digital transformation </li><li>Long-term clarity in defence, clean transport, and healthcare </li><li>A regulatory framework aligned to a decarbonising, digitising economy </li></ul>It is a Budget that blends realism with ambition, stability with direction, and caution with the confidence to lead.<h3>Larkspur International’s View</h3>From our insights to our analysis of the OBR’s forecasts, the message is clear:The UK is ready to build, modernise, and compete.And it is looking to the private sector to help shape that future.Larkspur International will continue to support businesses as they explore new opportunities, navigate policy changes, and expand within a UK that is choosing to move forward boldly.

Budget 2025: Stability, Ambition, and the UK’s Path to Global Leadership

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The UK’s £300bn+ public procurement market is undergoing its most significant structural shift in a decade. The landscape that is fragmenting, opening up, and increasingly welcoming to new entrants. For international investors, high-growth challengers, and tech-driven service providers, this represents a major moment of opportunity.Below, we unpack the key trends shaping the UK public sector market and what they mean from Larkspur’s strategic perspective. 1. Strategic Suppliers Are Losing Ground- Opening Doors for New EntrantsThe UK Government’s 39 Strategic Suppliers traditionally the gatekeepers to major contracts have seen their market share fall to just 10%, a five-year low. Their revenue has also declined even as overall public procurement grew.This is a clear signal:<ul><li>The UK is deliberately diversifying its supplier base.</li></ul>Government disaggregation, pro-SME policy, and new procurement rules under the Transforming Public Procurement reforms are breaking up historic monopolies. International firms, innovative SMEs, and scale-ups now face fewer structural barriers to entry. Looking to enter or expand in the UK can now compete more effectively against incumbents. Early positioning, market intelligence, and partnership building will be essential. 2. International Firms Are Gaining Share- But the UK Wants More Local InvestmentUK-headquartered suppliers still command the largest share of revenue, but this has fallen from 65% to 61% in five years. European, US, and Canadian suppliers continue to grow their footprint.Two implications matter for Larkspur’s portfolio:<ul><li>The UK is increasingly receptive to international competitors</li></ul>Foreign suppliers are not only welcome, but they are also winning more business than ever.<ul><li>But economic sovereignty concerns are rising</li></ul>Political sentiment is shifting toward the localisation of supply chains and UK job creation, especially in tech, defence, and infrastructure.Larkspur supports organisations in localising operations, establishing UK subsidiaries, forming partnerships, and strengthening supply-chain commitments- now a decisive factor in public sector competitiveness. 3. £41.7bn in Contracts Are Expiring This Parliament- With 2026 as a Breakout YearPerhaps the biggest opportunity:<ul><li>£12.8bn of Strategic Supplier contracts are set to expire in 2026 alone.</li></ul>This is prime territory for Larkspur’s public-sector-focused clients. Challengers that prepare early- mapping buyers, identifying frameworks, and aligning propositions, can displace incumbents for the first time in years.Key hotspots include:<ul><li>Technology and cloud services (DBT to reprocure Microsoft &amp; Azure licences; major shifts toward AI and digital)</li><li>Decarbonisation and energy (large NHS and Local Government estate programmes)</li><li>Major hospital programmes</li><li>MOD procurement, with 10% of equipment spend ring-fenced for novel tech from 2026</li></ul>We specialise in helping international suppliers’ position for UK contracts early, build stakeholder relationships, understand buying cycles, and tailor their market entry for maximum competitiveness. 4. Frameworks Remain the Real Gatekeepers- But They Are Opening Up56% of Strategic Supplier contracts are awarded via frameworks, three times the SME rate. Frameworks can be a barrier, but the report highlights:<ul><li>Only six frameworks account for over £6bn in awards. By targeting the right frameworks, not all frameworks, new entrants can unlock meaningful access to the UK public sector.</li></ul>High-value frameworks include those run by:<ul><li>Crown Commercial Service (CCS)</li><li>NHS Shared Business Services</li><li>Jisc </li><li>Transport and infrastructure consortia</li></ul>We help companies identify, qualify, and join the specific frameworks that align with their growth strategy, especially important for overseas suppliers unfamiliar with UK routes to market. 5. Technology, AI, and Digital Are Underserved- Especially in Local GovernmentCentral Government directs 43% of its Strategic Supplier spend toward technology. Local Government, however, allocates just 9%.That gap is not a lack of demand, it’s a lack of capacity.<ul><li>AI-related procurement is surging (26 contracts last year), but Strategic Suppliers still represent &lt;1% of all AI deals.</li></ul>This means:<ul><li>AI, data, automation, cloud, cybersecurity, and digital transformation markets are largely open to challengers</li><li>Local authorities urgently need tech partners but lack bandwidth and supply chain diversity</li><li>International digital firms have a unique opportunity to become trusted transformation partners</li></ul>We support digital suppliers in UK expansion, identifying buyer pain points, mapping the competitive landscape, and preparing compliant, compelling propositions. 6. Defence, FM, Infrastructure and Decarbonisation Continue to Offer Deep Opportunities<ul><li>Defence</li></ul>Despite political rhetoric, defence spend with Strategic Suppliers has grown only 1.2% CAGR.With MOD committing 10% of its future equipment budget to novel tech, international defence-tech and dual-use innovators have a golden window.<ul><li>Outsourcing and FM</li></ul>Still 50% above pre-pandemic levels and growing at 8.8% CAGR, ideal for suppliers offering estate management, health logistics, security, or soft services.<ul><li>Construction and Engineering</li></ul>Transport remains the biggest spending driver (HS2, Lower Thames Crossing, regional rail). Great opportunities for engineering firms, architects, decarbonisation specialists, and major contractors.We help infrastructure, FM, and defence suppliers understand UK regulatory environments, identify public-sector buyers, and localise delivery models. 7. The Rise of the “Challengers”: New Partnership PathwaysTen major firms now match Strategic Suppliers in revenue without being on the official list. For Larkspur’s smaller or mid-market suppliers, these companies are ideal channel partners, consortium leads, and framework bidders. We support organisations in finding strategic partners, forming consortia, and navigating UK teaming arrangements.8. What This Means for Larkspur Clients: A Market Ripe for Entry, Expansion, and InvestmentAcross all sectors, the UK public sector is signalling a clear message:The era of automatic incumbency is ending.Innovation, international expertise, and agile delivery models are in demand.Larkspur supports- international suppliers, innovators, and investors, to be exceptionally well positioned to capitalise on:<ul><li>Contract expiries in 2026</li><li>Weakening incumbents</li><li>Local Government digital underinvestment</li><li>MOD demand for novel defence tech</li><li>NHS infrastructure and decarbonisation needs</li><li>Increasing openness to international players</li><li>Frameworks that can unlock rapid scale</li></ul> 9. Conclusion: A Strategic Moment for Public Sector GrowthTussell’s 2025 report makes one thing clear:<ul><li>This is the most open, competitive UK public procurement market in a decade.</li></ul>For firms looking to enter, expand or invest in the UK, now is the time to act. And Larkspur International through our expertise in:<ul><li>UK market-entry strategy</li><li>Public sector positioning</li><li>Stakeholder engagement</li><li>Supply chain localisation</li><li>Procurement intelligence</li><li>Partnership and consortium formation</li></ul> Larkspur is ideally placed to help companies convert these insights into winning strategies.

UK Public Procurement Is Shifting

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<h3>If your apps suddenly stopped working today, you weren’t alone, the internet itself had a minor meltdown.From blank social feeds to frozen banking apps, millions of people were left staring at spinning wheels and error screens, wondering what just happened.</h3>Today, for nearly four hours, a significant portion of the internet simply stopped working.At 11:20 UTC a non-malicious traffic anomaly inside Cloudflare’s internal systems triggered a cascade of HTTP 500 errors across its global network. The result was immediate and far-reaching: X (Twitter) feeds went blank, ChatGPT and the OpenAI API became unreachable, Spotify stopped playing, Discord went dark, major banking apps failed, and even real-time public transport information vanished in several cities. Millions of people and thousands of businesses were affected simultaneously because one company- Cloudflare-&nbsp; now sits in front of roughly 20–25 % of all web traffic.Cloudflare is far more than a hosting provider. It is a reverse proxy, content delivery network (CDN), DNS resolver (1.1.1.1), DDoS mitigation platform, web application firewall, and zero-trust gateway rolled into one. For many organisations, from global enterprises to solo developers it has become the default way to make websites fast, secure, and resilient. That efficiency, however, comes at a price: when Cloudflare falters, the blast radius is planetary.This is not the first time we have seen an outage of this magnitude, and it will not be the last.<ul><li>&nbsp;June 2021-&nbsp; Fastly: one invalid customer configuration took down the BBC, Reddit, Amazon, and much of GOV.UK for an hour.</li><li>July 2024- CrowdStrike: a single defective update grounded airlines, closed hospitals, and cost the global economy an estimated $5.4 billion.</li><li>2025- Multiple AWS US-EAST-1 incidents, including October 2025, routinely disrupt Netflix, Slack, Robinhood, and Disney+.</li></ul>Each incident shares the same root pattern: centralisation converts a local software bug, traffic spike, or certificate error into a global crisis.The economics are compelling. Building your own global CDN, DDoS protection, and zero-trust platform is prohibitively expensive, so organisations understandably consolidate onto a handful of superbly engineered providers. Those providers deliver extraordinary performance and security at a fraction of the cost of doing it yourself. The unintended consequence is that the internet’s failure domains have quietly consolidated into a small number of companies. When any one of them has a bad day, the world feels it.True resilience now requires deliberate architectural choices that most organisations currently avoid because they add complexity and cost:<ul><li>Multi-CDN routing with automatic failover</li><li>Diversified authoritative DNS across unrelated providers</li><li>Rigorous chaos engineering and regular “game day” exercises at global scale</li><li>Progressive adoption of decentralised edge alternatives (IPFS, Fleek, Fly.io, etc.) for non-critical workloads</li><li>Large enterprises and hyperscalers already implement many of these measures; most mid-sized and smaller organisations do not, often because the short-term savings of single-vendor reliance are simply too attractive.</li></ul>At Larkspur International we have worked with partners to help design systems that remain available even when a major third-party provider fails. That work has never felt more relevant than it does today.The internet was originally designed to route around damage. Somewhere along the way we rebuilt it to route through a handful of indispensable gatekeepers. Outages like today’s are not aberrations- they are the predictable consequence of the architecture we have collectively chosen.The good news is that the fixes are known, tested, and increasingly affordable. The difficult part is making the deliberate decision to invest in resilience rather than continuing to enjoy the convenience and cost advantages of centralisation, until the next global outage forces the issue.If today affected your organisation and you would like to explore practical ways to reduce single-provider risk without sacrificing performance or breaking the budget, please feel free to send us a message. We are always happy to share what we have learned.Stay safe online.

Why the Internet Keeps Breaking and What Comes Next

Larkspur International

Where Government Meets Business Growth
Larkspur International operates at the intersection of business and government where decisions are shaped, risks emerge, and opportunities are realised.

Larkspur International is a business consultancy with a growth mindset working alongside clients to navigate government systems, eliminate barriers, and deliver measurable commercial outcomes.

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