Rolls-Royce, BAE Systems and Babcock share prices rise on David Cameron’s Defence Review and £12bn spending increase
The shares of big name defence firms have surged in the wake of an announcement by David Cameron that government spending on new equipment will increase by £12bn to deal with "diverse" threats.
Rolls-Royce has closed up 3.08 per cent, the FTSE's biggest riser while BAE Systems climbed 1.02 per cent and Babcock closed 1.62 per cent higher.
The Prime Minster said spending would include two new "strike brigades" of up to 5,000 military, ready to tackle Paris-style attacks. These units will include:
Read more: Osborne promises £3.4bn extra spending on counter-terrorism
- Up to 600 armoured vehicles
- Nine Boeing P8 maritime aircraft
- 24 new Lockheed Martin F35 fighter jets, 16 more than previously planned
- Two additional squadrons of Typhoons from extending the life of current Typhoons
- A new drone fleet
- 13 new frigates, including eight BAE Systems Type 26 warships
The PM also said the cost of renewing the UK's Trident defence submarines is likely to increase by £6bn to £31bn.
The total budget for defence spending will climb to £178bn over the next decade with the additional cash, fulfilling a Nato commitment to spend two per cent of GDP on the military.
It follows further commitments to spending on counter-terrorism and cyber security made by George Osborne on Sunday.
Cameron confirmed that he would make a case for UK military action in Syria on Thursday to fight Islamic State (IS).