Related<\/span>\n\t\t\t\tPost UK election, ‘defense will have to fight hard for what it needs’<\/h3>\n\t\t\t\t\t\t\t\t\t
The Conservative government\u2019s general election effort June 8 may have ended in failure. But for the immediate future, the Ministry of Defence will continue to be pinched.<\/p>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/a>\n\t<\/aside>\n\t\n\n\n
Howard Wheeldon, a consultant at Wheeldon Strategic Advisory, said it was vital Britain step in with adequate funding of its own.<\/p>\n\n\n\n
\u201cAs the cards are currently placed, Brexit looks to be bad news for the U.K. aerospace and defense industry, so the most important thing that the U.K. government can do is to provide genuine and fulsome financial support for future research and development technology,\u201d he said.<\/p>\n\n\n\n
In Rome, that European defense fund is seen as significant.<\/p>\n\n\n\n
\u201cEU funding for defense will give a strong push to industrial collaboration, meaning that EU members should be able to purchase more EU products rather than just, for example, French-German products,\u201d said Michele Nones, a security and defense expert at the Istituto Affari Internazionali, a think tank partly funded by the Italian Ministry of Foreign Affairs.<\/p>\n\n\n\n
On the broader budgetary front, departure from the EU after 2019 could hurt British defense spending if Brexit leads to a \u201csignificant\u201d fall in gross domestic product, according to Malcolm Chalmers, deputy director of the Royal United Services Institute think tank.<\/p>\n\n\n\n
Britain will need to take tough decisions on spending and taxes, which could hit the defense budget, he said June 12 at an air power conference in London.<\/p>\n\n\n\n
Running the numbers<\/h2>\n\n\n\n
Brexit may have relatively limited impact on British firms\u2019 sales, as none of the U.K.\u2018s top 10 defense companies earns more than 7 percent of annual revenue from the rest of the EU, said Alex Ashbourne-Walmsley, of Ashbourne Strategic Consulting. That is compared to up to 52 percent of revenue from the U.S. and more than 20 percent from the Asia-Pacific market, she added.<\/p>\n\n\n\n
EU companies, meanwhile, have major presence in the U.K. aerospace and defense market, with Airbus, Leonardo and Thales leading the way.<\/p>\n\n\n\n
A big step for Anglo-French industrial consolidation after Brexit will be a program launch for an airborne cruise missile to succeed the Storm Shadow (or Scalp) missile, said Fran\u00e7ois Lureau, of consultancy EuroFLconsult and former French procurement chief.<\/p>\n\n\n\n
\u201cThis will be decisive for the future of MBDA and British-French relations,\u201d he said.<\/p>\n\n\n\n
The political climate has changed, as countries will no longer consider a program on their own due to budgetary burden. \u201cThere is an awareness at the political level,\u201d he said. \u201cIt is evolution, maybe a revolution.\u201d<\/p>\n\n\n\n
The requirements of the armed forces vary widely, but the chiefs of staff will come under greater political pressure to buy the same kit as other European services, he added.<\/p>\n\n\n\n
Fran\u00e7ois G\u00e9r\u00e9, chairman of the think tank Institut Fran\u00e7ais d\u2019Analyse Strat\u00e9gique, asserted that the aftereffects of Brexit will be limited, as companies will find a way to work with Britain. The U.K. was outside the euro currency zone, he noted, but that did not hinder business flows.<\/p>\n\n\n\n
Warning lights<\/h2>\n\n\n\n
A failure of Britain and the EU to agree to a free trade deal could disrupt supply chains into and out of the U.K., officials have warned.<\/p>\n\n\n\n
In July, EU chief Brexit negotiator Michel Barnier used Airbus as an example of a company that would suffer constraints moving components between its U.K. wing operation and other European sites if a deal was not made.<\/p>\n\n\n\n
One relationship Britain hopes will be immune is the tie-up with France, which has yielded operational and industrial benefits since the two sides signed the 2010 Lancaster House defense treaty.<\/p>\n\n\n\n
\u201cFrance remains the U.K.\u2019s most important European defense partner, partly because it is the only other nuclear power in Europe,\u201d Ashbourne-Walmsley said.<\/p>\n\n\n\n
The future strength of that relationship was called into question July 13 when France and Germany announced plans to cooperate on a new European fighter, missile and attack helicopter programs.<\/p>\n\n\n\n
Trevor Taylor, a senior fellow at the Royal United Services Institute, believes it unlikely the move would derail U.K. defense cooperation with France or Germany.<\/p>\n\n\n\n
\u201cBecause of the potential of U.K. money to contribute to developmentcosts and the size of the market, Britain will continue to have some attraction as a partner in defense projects,\u201d he said.<\/p>\n\n\n\n
In Rome, much hangs on Brexit, as Italy cooperates closely with the U.K.<\/p>\n\n\n\n
\u201cItaly will hope the U.K. continues to participate in international missions and programs, and continues to be an open market for EU companies, and vice versa,\u201d said Nones, the security and defense expert.<\/p>\n\n\n\n
\u201cItaly has a great interest in such a deal because of its cooperation with the U.K. on aeronautical, helicopter and missile programs,\u201d he added. \u201cIt is also unthinkable that we cannot find agreement on the industrial side, given Leonardo\u2019s presence in the U.K.\u201d<\/p>\n\n\n\n
There\u2019s consensus on common defense with a rise in \u201cterrorism\u201d and the \u201cTrump effect,\u201d with the U.S. pushing for more defense spending yet showing less interest in the U.K., he said.<\/p>\n\n\n\n
In Germany, there is much uncertainty on the Brexit effect.<\/p>\n\n\n\n
\u201cNobody knows how this will end,\u201d said Karl-Heinz Kamp, president of the government\u2019s Federal Academy for Security Policy, based in Berlin. But Brexit helps move Europe toward funding research and procurement for common capabilities, leaving the operational side to NATO and its Article 5,\u201d he said.<\/p>\n\n\n\n
In German industry, there is great uncertainty over Brexit concerning tariffs, taxes, market access and supplier networks, according to Karsten Lepper, a defense policy expert at BDSV, a German defense industry association. \u201cThis will take time,\u201d he said.<\/p>\n\n\n\t