Shares in Babcock International PLC (LSE:BAB) rose on Tuesday afternoon after the government confirmed a multibillion-pound boost to the UK’s submarine-building industry.
The engineering group, which maintains and upgrades the Royal Navy’s fleet, is expected to benefit from the £6 billion investment, part of a wider defence funding package to be outlined by Chancellor Rachel Reeves.
The funding will be spread over four years and aims to expand the capacity and productivity of the UK’s submarine industrial base.
Other key beneficiaries include BAE Systems PLC (LSE:BA.) and Rolls-Royce Submarines.
The announcement follows a pledge by Prime Minister Keir Starmer to increase defence spending in response to growing geopolitical threats and calls from the United States for Europe to take greater responsibility for its own security.
The government plans to grow the nuclear-powered attack submarine fleet from seven to up to 12 vessels. Additional funding will go to naval bases in Plymouth and Scotland, and to steel manufacturer Sheffield Forgemasters.
The stock rose 11p to 1,057p.