BAE Systems PLC (LSE:BA.), Chemring Group (LSE:CHG) and other UK defence stocks rallied after the government confirmed a £15 billion increase in military spending, with drones, ammunition stockpiles and the nuclear deterrent among the priorities.
Keir Starmer, speaking at BAE's Malloy Aeronautics drone factory in Berkshire on Tuesday, said the defence investment plan (DIP) would prioritise public security while "transforming our armed forces and giving them the funding and equipment they need to fight and defend our nation".
He added: "The world is a more dangerous and volatile place, so it is only right we are boosting the number of troops on the ground, rebuilding ammunition stockpiles and investing in cutting edge technology to ensure we outpace our adversaries for generations to come."
More than £5 billion will be spent over four years on drones, while £63 billion has been allotted to strengthen the UK’s nuclear deterrent and fund the Dreadnought and SSN-AUKUS submarine programmes.
The plan also includes funding for a next-generation stealth fighter jet for the RAF and upgrades to naval bases at Faslane, Portsmouth and Devonport.
The DIP plan follows the resignation earlier this month of former defence secretary John Healey, who reportedly quit after concerns that an £18 billion funding gap had not been closed, raising questions over Britain’s Nato commitments.
New defence secretary Dan Jarvis said: ""By choosing to embrace new technology, I am equipping our troops with the autonomous systems which will give them the edge on the battlefield. Britain is stepping up on security."
BAE Systems chief executive Charles Woodburn said the plan provided "much-needed clarity for industry" and a "clear strategic direction" for the armed forces.
He said BAE would continue to invest in innovation, productivity and capacity, from "fighter jets, warships and submarines" to "uncrewed and autonomous systems".
Chemring jumped 5.8%, Melrose Industries PLC (LSE:MRO, OTC:MLSPF) rose 3.4%, Rolls-Royce Holdings PLC (LSE:RR.) added 2.7%, Babcock International PLC (LSE:BAB) gained 2.3%, QinetiQ Group PLC (LSE:QQ.) climbed 2.1% and BAE Systems rose 1.5%.
