Share prices for weapons companies in Europe have jumped significantly, with the UK’s FTSE 100 index reaching an all-time high. This surge comes amid discussions about increasing defense spending, particularly in response to the ongoing conflict in Ukraine.
On Monday, the FTSE 100, which lists the largest companies on the London Stock Exchange, hit a record level. Arms manufacturer BAE Systems saw its shares soar by as much as 17.5%, adding approximately £5.92 billion to its market value just from the previous Friday’s close. Rolls-Royce, known for its defense and aerospace products, also benefited, with its stock climbing by 6% at one point during the day.
The FTSE 250 index, which includes smaller British companies, also rose, reflecting the overall optimism about increased military spending. Notable gains were seen in defense technology firm QinetiQ, whose shares increased by 10.3%, and Babcock International, which rose by 9.3%.
This uptick in defense stocks wasn’t limited to the UK. Across Europe, shares of major defense firms also experienced significant gains. Germany’s Rheinmetall saw its stock rise by 18%, while Italy’s Leonardo increased by 15%. This trend follows a meeting of European leaders in London, where discussions focused on boosting funding for Ukraine amid its ongoing struggle against Russia.
UK Prime Minister Sir Keir Starmer recently announced a loan to Ukraine and a £1.6 billion deal to supply missiles from a factory in Belfast. These moves are part of a broader strategy to enhance military support for Ukraine and to increase the UK’s defense spending to 2.5% of its GDP by 2027.
Chancellor Rachel Reeves has also committed an additional £2.26 billion to support Ukraine, funded by profits from Russian assets that have been frozen since the war began in February 2022. Starmer’s comments about forming a coalition of European and other allies to secure peace for Ukraine further highlight the commitment to increased military spending.
As the situation develops, it is clear that defense companies are positioned to benefit from these shifts in government policy and international relations.