What is happening in the market?
Defence spending continues to be driven by the response of Western nations to the Russia-Ukraine conflict, increasing instability in the Middle East and wider geopolitical tension, including the threat to critical subsea assets. Commitments made within NATO to increase defence budgets.
In November 2022, the UK government announced that it would maintain the national defence budget of at least 2% of GDP and in 2024 it has allocated 2.3% of GDP. Looking ahead, the government further committed to a defence budget of 2.5% of GDP by 2030.
The UK Ministry of Defence (MoD) has also confirmed a commitment to maintain its nuclear deterrent while modernising conventional naval assets in the fleet.
The SSN-AUKUS submarine programme of nuclear-powered attack submarines to replace the Astute-class is fundamental to the trilateral agreement with the United States and Australia. The programme is already driving investment in skills training and jobs in the UK, with £4 billion committed to the design phase.
Global defence-spending has seen a sharp increase during 2024 and is expected to continue growing, with a significant number of naval new construction programmes starting and many more in the design and planning stages.
The US, Australia, Canada and France remain committed to long-term investment programmes. The US Columbia-class and Virginia-class programmes are active and already involve the use of UK approved supply chain.
What does this mean for us?
As a pre-eminent supplier of high-pressure gas storage systems to NATO members and NATO-friendly state navies, CSC has long-term contracts to supply bespoke products and services for conventional and nuclear submarine and surface ship programmes in the UK and overseas.
CSC is currently in discussions for future UK and overseas naval contracts which would support manufacturing activity to 2040 and beyond, including the well-publicised SSN-AUKUS programme.
Sole supplier to UK Royal Navy newbuild programmes through prime contractors BAE Systems and Babcock, CSC is also a long-term supplier to French shipbuilder Naval Group for domestic and export newbuild programmes.
In January 2025, CSC was awarded a strategically significant contract to supply safety-critical pressure vessels to the US defence prime contractor, General Dynamics Electric Boat (GDEB), the company responsible for the design, construction and lifecycle support of submarines for the US Navy.
The contract award covers supplier qualification and the delivery of pressure vessels to GDEB in 2026 and provides a foundation for future growth and development in the US naval defence market, where ongoing nuclear submarine new construction programmes are planned to run through to 2043.
Although the phasing of defence project milestones and contract revenues can fluctuate significantly between and within financial years, there is good medium and long-term visibility of vessel construction programmes and planned defence expenditure from navies and their prime contractors.
CSC is the principal supplier of inspection and testing services to the UK MoD for through-life cylinder performance and safety management on various classes of nuclear submarine.
CSC has current opportunities to supply European navies with these inspection and testing services, typically having been the OEM for onboard pressure systems when the submarines or surface ships were built.
For more information on how we performed this year, see our latest Annual report.
