UK plan for the armed forces drives European defence; Babcock leads the way in London

(Il Sole 24 Ore Radiocor) - A brilliant session for the European defence sector, which is riding high on the back of the £15 billion investment plan announced by the UK. In London, Babcock and BAE Systems are surging. Elsewhere in Europe, on the Milan Stock Exchange Leonardo is leading the pack, whilst Avio and Fincantieri are also doing well. In Paris, the spotlight is on Thales and Airbus, whilst in Stockholm Saab is capitalising on the $2.54 billion contract to supply 16 Gripen E fighter aircraft to Ukraine. Finally, in Frankfurt, Rheinmetall is the star of the session, continuing its rebound following the correction – deemed excessive by several analysts – that followed the German government’s cancellation of a project to build six frigates.

Back in the UK, outgoing Prime Minister Keir Starmer has pledged to allocate an additional 15 billion pounds to modernise the British armed forces. The announcement forms part of a long-delayed investment plan, designed to prepare for the wars of the future, and marks what is likely to be the Labour leader’s final act as the country’s political head. It was precisely the controversies surrounding the defence budget in recent weeks that had prompted John Healey to step down as Defence Secretary, dealing a severe blow to the Starmer government. The increase in spending now planned for the armed forces is expected to be higher than that estimated in previous drafts and represents a 5 per cent rise in annual defence spending, which will reach £79 billion a year by 2029. And, although it falls short of the 28 billion pounds requested by defence leaders, Starmer’s likely successor, Andy Burnham – who is expected to take the helm of the government as early as 20 July – could help to develop the plan. Furthermore, with the presentation at the NATO meeting in Ankara (Turkey), he will be able to highlight that Britain is on track to meet its commitment to reach defence spending of 3.5 per cent of GDP by 2035, whilst also representing, according to industry insiders, a significant opportunity for companies in the sector.