Babcock International PLC, BAE Systems PLC and other defence sector company shares were higher on Monday following statements made at a major security summit over the weekend and on a BBC report that the UK is planning an increase in defence spending.
Prime Minister Keir Starmer said this time last year that the UK’s security budget would climb to 2.5% of gross domestic product by April 2027, with an "ambition" to raise it to 3% in the next parliament, supported by a long-term goal of spending 5% on national security by 2035.
Starmer signalled at the Munich Security Conference that this spending target may be brought forward, saying in a speech: "To meet the wider threat, it's clear that we are going to have to spend more, faster."
10 Downing Street has told the BBC that there are proposals being examined to meet that 3% ambition in the current parliament, ie by 2029, though the report stressed that the Treasury is wary about this.
Shares in Babcock were up 2.5% in early trading on Monday, with Chemring Group rising 2.4%, BAE up 1.4%, QinetiQ Group PLC 1.1%, Avon Technologies PLC 0.7% and Senior PLC 0.4%.