Shares in UK defence companies rose on Wednesday after getting boosts from Chancellor Rachel Reeves in the Spring Statement and a positive sector update.
FTSE 100 giant BAE Systems PLC was little moved, up 0.2%, but defence technology specialist QinetiQ Group PLC jumped 4.4%, both Chemring Group (LSE:CHG) and Babcock International PLC (LSE:BAB) rose 1.7%, while Melrose Industries PLC (LSE:MRO) rose 0.4%
Avon Technologies PLC (LSE:AVON) jumped 5%, but this was mostly reflecting its own trading update today, where it raised its outlook on the back of orders from the Ukraine army and two NATO navies for helmets, gas masks and underwater rebreathers.
In her statement to parliament, Chancellor Reeves confirmed plans to increase defence spending to 2.5% of GDP, funded by reducing overseas aid.
The Chancellor says this gives the Ministery of Defense an extra £2.2 billion next year.
"We will spend a minimum of 10% of the Ministry of Defence’s equipment budget on new novel technologies, including drones and AI enabled technology," she added.
She mentioned a boost for advanced manufacturing production in various British cities and "new business opportunities for UK tech firms and startups".
"We will establish a protected budget of £400 million within the Ministry of Defence," she said, "a budget that will rise over time for UK defence innovation with a clear mandate to bring innovative technology to the front line at speed.
"And we will reform our broken defence procurement system, making it quicker, more agile and more streamlined."