Join our community of smart investors

What will a £16.5bn boost mean for the UK’s defence sector?

The government has unveiled plans for the biggest investment in national defence in the last 30 years. Which companies stand to benefit the most?
What will a £16.5bn boost mean for the UK’s defence sector?
  • Prime Minister Boris Johnson has announced that the Ministry of Defence will receive an extra £16.5bn of funding over the next four years.
  • The focus will be on more modern fighting capabilities in the domains of space and cyberwarfare.

On the whole, defence companies’ earnings have proved relatively resilient in the face of Covid-19 thanks to the stability offered by long-term government contracts and the essential nature of their work. But that steadfastness hasn’t translated to their share prices – save for star performer Avon Rubber (AVON), the sector has been weighed down by lukewarm investor sentiment. This comes amid concerns that governments will curtail defence spending in the face of soaring national deficits and the need to invest in other areas of their economies to ensure a post-pandemic recovery. For the UK market, there have been additional worries that the integrated review of security, defence, development and foreign policy will recommend defence cuts.

To continue reading...
Join our Community of Smart Investors
  • Independent full-length company analysis
  • Actionable investment ideas and recommendations
  • Expert investment tools and data
  • Stock screens from Algy Hall
Have an account? Sign in