BAE Systems Shares Surge as UK’s £15bn Defence Boost Fuels Rally

BAE Systems (LON: BA.) shares surged more than 6% on Thursday, hitting a high of 2,006p before settling around 1,993p as the defence giant extended a powerful two-day rally sparked by the UK government’s long-delayed Defence Investment Plan.

The move has now added well over £3 billion to BAE’s market value since Tuesday’s close, on volume of more than 4 million shares, as investors piled into the stock following confirmation of major new government spending commitments squarely aligned with BAE’s core operations.

Published Tuesday after weeks of delay — a delay that had already cost one Defence Secretary his job — the plan confirms £15 billion in additional funding over four years, taking total planned defence spending to around £300 billion and pushing outlays to 2.7% of GDP by 2029.

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Crucially, the money flows directly into BAE’s businesses: £8.6 billion for the Global Combat Air Programme (GCAP), £63 billion for nuclear deterrent and submarine work, £11 billion for munitions, and £5 billion for drones and autonomous naval systems — covering combat-air, naval, weapons and autonomy divisions alike.

CEO Charles Woodburn told Reuters the funding is “vital to sustaining the specialist skills” underpinning the UK’s defence industrial base.

The rally has been reinforced by bullish broker commentary and appears to have gathered further momentum through Thursday’s session as investors and defence-sector funds continued buying. The gain now vastly outstrips the firepower of BAE’s own £500 million buyback programme launched last month.

Some caution remains: a £4.7 billion funding shortfall in the UK is still unresolved, with defence chiefs having sought £28 billion rather than £15 billion. BAE reports half-year results on July 30.