London's defence stocks failed to salute reports that Keir Starmer is pushing through an increase in military spending as one of his last acts as Prime Minister, with investors apparently hoping for more.
Shares in the sector were broadly lower on Friday despite the Financial Times reporting that Starmer is poised to commit at least £1 billion more for defence ahead of a long-delayed defence investment plan (DIP) due next week.
QinetiQ was among the biggest fallers, down 2.5%, while Melrose Industries slipped 2.3% and Rolls-Royce lost 1.6%. Babcock and BAE Systems traded slightly lower.
The DIP reportedly envisages total military funding rising by around £14.5 billion to £15 billion over the next four years, up from the previous proposal of £13.5 billion that prompted the resignation of defence secretary John Healey earlier this month.
However, the market reaction suggested investors had either already priced in additional spending or were disappointed by the scale of the increase.
Some figures in the defence sector had reportedly been hoping for as much as £2.5 billion of extra funding.
The package is expected to include increased spending on drones and autonomous systems, including uncrewed vehicles designed to resupply troops and evacuate casualties, alongside fresh funding for the UK's participation in the Global Combat Air Programme, the next-generation fighter jet being developed with Italy and Japan.
