Shares in leading defence companies across Europe have soared in anticipation of a new spending spree by governments, as the continent prepares for a big financial stand against Vladimir Putin
Defence firms got a £30billion boost as European governments prepare to hike spending in efforts to end the war in Ukraine.
Big companies and their suppliers are set to a bonanza as countries ramp-up orders for hardware and technology to back efforts to support President Volodymyr Zelenskyy, and to suspected the much hoped-for peace deal. Those include many in the UK, in what which ministers say will also boost the economy, benefiting all parts of the UK. Labour has vowed to increase defence spending from 2.3% to 2.7% of gross domestic products by 2027, what the government said was the biggest sustained increase since the end of the Cold War.
Around £30billion was added to the stock market value of defence and aerospace companies on Monday, as investors rushed to buy shares in companies poised to benefit from a flood of orders.
In the UK, BAE Systems saw its share price leap by 14% mi-afternoon, adding £6billion to its value, and hitting a record high. The firm, which employs around 50,000 people in the UK, designs, builds, and supports a variety of warships and developed several fighter jets such as the Tempest and Typhoon, and Hawk. Rolls Royce Holdings, whose contracts also include fighter jets, submarines and hi-tech gadgetry, saw its stock market value jump by almost £4billion. And Qinetiq, which makes the latest hi-tech devices and was the inspiration for James Bond’s Q, saw its share price rise 12%.
Defence firms in France, Germany and Italy also had a bumper day.
Russ Mould, investment director at broker AJ Bell, said: “Donald Trump accusing Volodymyr Zelenskyy of ‘gambling with World War Three’ could have easily triggered chaos on the markets, particularly as the meeting didn’t play out as expected. The fiery meeting involving the pair and JD Vance banished any hopes of a swift US-led resolution to the Russia/Ukraine war, although a European summit involving Zelenskyy was more encouraging.
“Investors aren’t simply expecting a boost to defence companies from supplying equipment and services to Ukraine. They’re also focused on the potential for governments around the world now taking defence even more seriously and spending large swathes of money to help others while also defending their own land.
Susannah Streeter, head of money and markets, Hargreaves Lansdown: “The shocking clash between Trump, Vance and Zelensky has brought the need for Europe to increase collective security into sharp focus. A show of co-operation among leaders at the weekend in London has reinforced expectations that military budgets will swell in a new era of collaboration to counter the Russian threat.”
It came as Keir Starmer signalled his opposition to overseas takeovers of UK defence firms. A number of UK-based industry heavyweights have been snapped-up by foreign buyers in recent years. The latest in the sights of suitors is Chemring, the FTSE 250 defence group, which has been targeted by America’s Bain Capital, one of the world’s largest private equity investors .
Without commenting on specifics, the Prime Ministers vowed: “Keep them British – we are very proud of what we do.” He added: “We should real confidence – we are really good at this in Britain, we are really good at making things. We are front of the game when it comes to AI and technology. We punch above our weight and we want to make sure we sure we stay in that place.
