Defense spending will be cut in the UK by making changes to the supply chain.UK Defense Secretary Liam Fox issued a warning earlier this week stating that Britain will need to reduce defense spending by changing industrial supply chains and procurement methods.

"There is no doubt that in the past there has been a culture of mutual over-optimism on costs, timing and performance," Fox said. "We need much more hard-headed assessments in future programs."

Fox stated that constraints on public financing will likely limit the amount of money available to be spent on defense supply procurement, meaning that costs need to be cut somewhere in the supply chain. The Ministry of Defense, Fox added, will need to undergo drastic structural changes in order to find sustainable, less expensive procurement methods. A new defense industrial strategy is expected to be published later this year after the strategic defense and security processes are reviewed.

"The current defense programs are entirely unaffordable and the unavoidable reality is that change is coming," Fox stated.

That change is expected to be slowly implemented over the next decade. Some suggestions to reduce cost include improving the government-industrial relationship, increased outsourcing and programs that would help break the barrier between buyers and manufacturers.

According to Michael Burkett at AMR Research, the United States' aerospace and defense supply chains could also be affected by the aftereffects of the economic recession, although no official announcements have been made concerning efforts to reduce costs.

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