Research by Barclays indicates that two thirds of UK companies believe a government-backed defence guarantee scheme would support their entry to the defence supply chain or benefit their existing exposure to the sector.

Sentiment about a government-backed scheme, that would support businesses overcome repayment risks, was assessed based on a survey among 1,000 business decision makers between October and November last year.

Read more: Versana brings Barclays’ US BSL deals onto platform

Meanwhile, 40 per cent of UK businesses expect their involvement in the UK defence sector to increase over the next 12 months, according to a separate Barclays analysis conducted this month among 537 business leaders across multiple sectors, company sizes and regions.

“Globally, the defence sector is at an inflection point, with a critical need to mobilise long-term private capital alongside traditional government funding to support growing security and resilience demands,” said Spyros Svoronos, Barclays’ global head of industrials investment banking. “Meeting these investment needs will require innovative capital solutions that can help scale the technologies and capabilities increasingly shaping the future of defence, including AI, cyber, advanced manufacturing and energy resilience.”

Read more: Private credit looks to fund defence supply chain

The findings further reveal that 21 per cent of respondents do not feel confident they could finance the upfront costs of delivering a defence-related contract.

Some of they key practical barriers for firms include funding and cashflow availability, access to financing, scale-up capital or working capital, and uncertainty around procurement processes.

Despite constraints, business appetite is strong with two thirds saying the government’s recently announced defence investment plan will create meaningful growth opportunities. Released last June, the investment plan will see nearly £300bn invested over four years in the UK defence sector.

Nearly half of respondents (48 per cent) expect the plan to have a positive impact on their region and 38 per cent foresee a positive impact on their own business.

The primary expected benefits include workforce development, new investment and partnerships into UK regions, a boost in research and development of new technologies, as well as the strengthening of international defence partnerships and exports.

Read more: European defence in “era of capital maturity”

More than a third of surveyed firms is planning to hire new staff over the next 12 months to support defence-related contracts, with a similar proportion also looking at increasing workforce and skills development.

“Clearer procurement, better visibility of future revenues for lenders and targeted support can help unlock the finance and investment needed for the sector to innovate, grow and deliver,” concluded Stuart Foster, head of coverage at Barclays UK Corporate Bank.