Vettel would finish the race in seventh place after suffering a puncture on the final lap, meaning his lead at top of the championship has been cut to just one point at the half-way stage of the season.
The Mercedes-GP driver dominated the race as he converted pole position into the lead and led throughout, to finish ahead of his teammate Valtteri Bottas for his fourth triumph in 2017.
Starting from a dominant pole with Vettel only third, the Mercedes driver sprinted away at the front ahead of Raikkonen.
Finn Bottas, who topped both First and Second Practice for Mercedes at Silverstone on Friday was handed the penalty after the team were left with no choice but to replace the unit which had done four of the six races it was supposed to.
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"I'm not here for fun and giggles, I'm here to win this championship", he added to Sky Sports News HQ.
But the three-time world champion thinks Ferrari will be strong in the race and he must build a lead off the line later today.
The race will see the drivers battling it out to complete 52 laps of the 5.891 kilometer (3.66 mile) long circuit. With the benefit of fresher rubber, Bottas was able to displace the Ferrari to move to third - which ended up being second place after Raikkonen was forced to make a late stop to replace a failed front-left tyre.
"I always try to save the best until last".
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Raikkonen's tyre tread appeared to come apart with two laps to go, while Vettel suffered a total failure one lap later.
Recalling the moment the tyre delamination occurred, he said: "Everything was going more or less smoothly and in the end the gap was fine for us but then all of a sudden two laps from the end I don't know what happened". "I am so proud I could do this for you all".
Asked whether he had any chance of matching Hamilton, Vettel said: "No".
Ricciardo, meanwhile, had a gearbox change on Friday night that saw him fall victim to a five-place grid penalty.
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At the start while Lewis and Kimi had a clean start, Vettel had a poor start dropping to a fourth behind Max Verstappen who jumped into third. Force India duo Esteban Ocon and Sergio Perez finished the race in eighth and ninth respectively. I feel we've grown together in a really positive year, and Valtteri on board has brought a lot of positivity to the team and dispelled a lot of negativity we had before.