Lead

Wes Streeting, the new defence secretary, has said increased defence spending would make “an enormous contribution” to economic growth, as he emphasised that the military will be a spending priority for Andy Burnham’s government over other departments. The comments came as shares in defence companies rose sharply after Burnham appointed John Healey as chancellor, with investors hopeful of increased spending on military suppliers.

Streeting, speaking at the Farnborough airshow, did not make any extra financial commitments but promised he would give the arms industry “clarity and confidence” in contrast to the row that contributed to the fall of Keir Starmer. He acknowledged that spending more on defence would come at “an opportunity cost across government,” meaning the Ministry of Defence must show “we are spending existing resources wisely.”

The new defence secretary also criticised Israel for having “fallen short” in its conduct during the war in Gaza and in its operation in the West Bank. Streeting said defence was the portfolio he wanted on his return to government after he resigned as health secretary in May.

Coverage Comparison

Multiple reports from The Guardian cover different aspects of the story. One report focuses on Wes Streeting’s remarks and the government’s commitment to increase defence spending. It notes that Burnham recommitted the UK to lifting defence spending from 2.6% of gross domestic product to the Nato target of 3.5% by 2035 in his first speech as prime minister on Monday, implying a real-terms increase of more than £25bn in less than a decade.

Another report highlights the market reaction to Healey’s appointment as chancellor, which was announced after markets closed on Monday. Defence stocks were among the biggest risers on the FTSE 100 on Tuesday morning: Babcock International rose 7%, BAE Systems was up 3%, and Rolls-Royce increased nearly 2% on the FTSE 100. On the FTSE 250, QinetiQ rose nearly 4%. Investors hope Healey will use his new position to increase defence spending, possibly through issuing “war bonds,” a form of borrowing allocated only for the military that he has previously advocated for in government.

A third report focuses on Burnham’s plan to place the renewal of Trident at the heart of his vision of a reindustrialised Britain, with a visit to Barrow-in-Furness to launch the next phase of the nuclear submarine replacement programme. The new prime minister intends to emphasise that defence spending on projects such as the £31bn Dreadnought-class boats built in the Cumbrian town is a case study of taxpayer investment revitalising communities around the UK. He said: “Keeping this country safe is the first responsibility of any government – but security is not only about what we build; it is about who builds it, and who benefits from it.” A new phase of contracts worth £8.4bn, part of the already agreed Dreadnought programme, will help support 18,000 extra jobs in nuclear defence by 2030 and 22,000 additional apprentices by 2035, Downing Street said.

Key Claims

  • Wes Streeting said increased defence spending would make “an enormous contribution” to economic growth.
  • Andy Burnham recommitted the UK to lifting defence spending from 2.6% of GDP to the Nato target of 3.5% by 2035.
  • Defence stocks, including Babcock International, BAE Systems, and Rolls-Royce, rose sharply on the FTSE 100 after Healey’s appointment.
  • Healey resigned last month in a row over defence spending, accusing Keir Starmer and his chancellor, Rachel Reeves, of putting the country’s security at risk.
  • Healey has previously advocated for issuing “war bonds” to increase defence spending.
  • The UK’s military nuclear activities currently support 47,000 jobs, including 13,500 in the Barrow shipyard.
  • The new Dreadnought submarines are intended to replace the ageing Vanguard-class submarines.
  • The government’s plans include supporting 18,000 extra jobs in nuclear defence by 2030 and 22,000 additional apprentices by 2035.

Perspectives

Government perspective

Andy Burnham’s government sees defence spending as a tool for economic growth and reindustrialisation. Burnham intends to use defence investment to transform people’s lives and has placed Trident renewal at the heart of his vision. The government argues that spending on projects like the Dreadnought-class boats is a case study of taxpayer investment revitalising communities.

Market and investor perspective

Investors are optimistic about increased defence spending under the new government. The rise in defence stocks reflects hope that John Healey, as chancellor, will increase defence spending, possibly through issuing “war bonds”. However, some analysts caution that Healey may face competing demands and may not be able to find significant extra cash for defence.

External commentary

Chris Beauchamp, chief market analyst at the broker IG, provided a cautious view: Healey’s appointment would not necessarily lead to an immediate windfall for defence. He said: “As chancellor, he will have many competing demands, and won’t just be the MoD’s man in No 11. His experience made him an obvious candidate for the role, and he represents a middle way between Miliband and Mahmood, but it will not be easy to find lots more cash for defence, especially when the new PM is so busy making broad spending commitments in other areas.”