BAE Systems CEO Demands Immediate Publication of Delayed Defence Spending Plan
The chief executive of Britain's largest defence contractor, BAE Systems, has issued a pressing call for the government to release a long-overdue military spending blueprint without further delay. This urgent appeal comes as the company announces unprecedented financial results, fueled by a surge in global demand following Russia's full-scale invasion of Ukraine.
Record Sales and Investment Concerns
Charles Woodburn, the CEO of BAE Systems, emphasized that the defence investment plan (DIP), originally slated for late 2025, is critically impeding industry investment. "We were expecting it before the end of last year and from an industry perspective we're all keen to crack on," Woodburn stated on Wednesday. "The sooner the better as far as we're concerned. Earlier clarity means that industry can make plans and invest, deploy our strong balance sheets ... so looking for clarity is important for business. We're keen that we see the publication of [the DIP] as soon as possible."
BAE Systems has reported its best-ever financial performance, with annual sales exceeding £30 billion for the first time, marking a 10% increase from the previous year. The company's shares surged by 3.8% upon the announcement, contributing to the FTSE 100 reaching a record high. BAE's order backlog, representing secured work, has also hit a historic peak of £83.6 billion, reflecting heightened demand among NATO allies.
Global Demand and Technological Evolution
Woodburn highlighted that the conflict in Ukraine has accelerated defence technology evolution dramatically. "It's hard to escape the sense that the brutal conflict in Ukraine has fast-tracked more than a decade's worth of defence technology evolution into just a few years," he remarked, noting an "unprecedented pace of technological change." BAE Systems manufactures a wide array of weapons, including tanks, aircraft, warships, missiles, and artillery.
In alignment with this, Labour leader Keir Starmer recently advocated for increased and sustained defence spending at the Munich Security Conference, citing threats from Russia. Starmer is reportedly considering accelerating plans to allocate 3% of GDP to defence, asserting, "We must build our hard power because that is the currency of our age. We must spend more, deliver more, and coordinate more."
Industry Capacity and Government Clarity
When questioned about the British industry's ability to meet rising demand, Woodburn expressed confidence but stressed the need for clearer government spending commitments. "We just need a clear signal and a clear steer of what's required. The way we've stepped up in recent years I think is a good indication that the industry can deliver when we're given a clear outlook," he explained.
BAE Systems secured significant new business over the past year, including a £4.6 billion contract from Turkey for 20 Typhoon fighter jets and an order from Norway for Type 26 frigates. The company's financial results surpassed analyst expectations, with profits projected to rise by up to 11% in the coming year. Additionally, BAE raised its dividend and garnered £36.8 billion in new orders, significantly outpacing its delivery volume.
The company's shares have experienced a sharp increase this year, valuing BAE at over £60 billion, as investors anticipate sustained growth in defence budgets across Europe and beyond.
