BAE Systems PLC (LSE:BA.) and Rolls-Royce Holdings PLC (LSE:RR.) sat as the FTSE 100’s two biggest fallers on Monday as reports emerged Germany is planning to cut military support for Ukraine.
BAE and Rolls-Royce fell by 2.8% and 2.0% respectively on the back of news that cutbacks by Berlin could lead to the government slashing and eventually ceasing military aid to Ukraine.
According to the Frankfurter Allgemeine Zeitung newspaper, the German finance ministry is looking to scale back on support for Ukraine as part of budgetary savings this year.
This follows an agreement between the ruling coalition of the Social Democrats, the Greens and the Liberals last month, which had detailed plans for Europe’s main supplier of aid to Kyiv to cut its support in half, to €4 billion (£3.4 billion) next year.
This would then fall to €3 billion in 2026 and €500 million in each of the following two years, under plans seen by the newspaper.
A letter from finance minister Christian Lindner in early August said new support would no longer be funded by Germany’s federal budget.
Instead, funding is set to come from “European sources” and frozen Russian assets, though when this support will flow remains to be seen.
London-listed defence firms slipped on the news, with Melrose Industries PLC (LSE:MRO, OTC:MLSPF) also among the FTSE 100’s biggest fallers.