The UK government's prolonged delay in publishing its £28bn Defence Investment Plan (DIP) is driving cutting-edge defence start-ups to consider relocation abroad or closure, executives warn. Activity has stalled for over a decade, with businesses adding risk premiums to government bids due to a lack of contract awards. The DIP, initially expected last autumn, remains unpublished amid a funding gap.

This paralysis is forcing companies like Skycutter, a drone specialist designing for Ukraine, to explore lucrative US contracts despite ranking first in Pentagon trials. Skycutter cited "contractual certainty" as key, considering a US base despite US venture capital interest. Founder Rob Taylor of 4GD is also mulling a US move, frustrated by slow document processing and a market in "hiatus".

The MoD claims £28bn in contracts awarded since July 2024, but executives counter that bureaucratic delays hinder implementation. The UK risks losing its technological edge as optimism fades for firms like German drone maker Helsing and Portuguese Tekever.