UK defence stocks have surged amid Prime Minister Sir Keir Starmer’s urgent calls for Europe to ramp up military readiness and prepare for potential conflict with Russia.
Shares in major firms like Babcock International climbed nearly 4% to 1,346.00p in early Monday trading, while Melrose Industries jumped 3.5% to 664.60p, BAE Systems rose almost 3% to 2,023.00p, and Rolls-Royce edged up just under 1% to 1,280.00p.
Broader European markets have also felt the ripple effects, with defence stocks like Germany’s Rheinmetall and Sweden’s Saab soaring up to 17.5% and 16% respectively in recent sessions.
Speaking in Munich on Saturday, Starmer said that ‘all the warning signs are there’.
“For many years, for most people in the United Kingdom, war has been remote. Something that concerns us deeply, but which happens far off. But now we feel the solidity of peace, the very ground of peace now softening under our feet. It is the job of leaders to be ahead of these seismic shifts. Yet that is against the grain of history,” he said.
He added that there is no British security without Europe, and no European security without Britain.
“The prize here is greater security. Stronger growth for the United Kingdom and the EU, which will fuel increased defence spending and the chance to place the UK at the centre of a wave of European industrial renewal. I understand the politics very well. It will mean trade-offs. But the status quo is not fit for purpose. And to me there is no question where the national interest lies. I will always fight for what’s best for my country.”
In a seperate Telegraph op-ed on Monday (16 February), he reiterated that Europe must prove it is ‘truly serious’ about defence, even hinting at the possibility of British troops on the ground in Ukraine if required.
“I do not say that lightly. I feel very deeply the responsibility that comes with potentially putting British servicemen and women in harm’s way. But any role in helping to guarantee Ukraine’s security is helping to guarantee the security of our continent, and the security of this country,” he said.
An eye on spending
The Prime Minister’s rhetoric comes amid mounting pressure from US President Donald Trump for NATO members to boost spending, with the UK already committed to raising defence expenditure to 2.5% of GDP by April 2027 and aiming for 3% by the end of the next Parliament.
However, reports suggest Downing Street is now considering accelerating this timeline, potentially hitting 3% by 2029 to address a £28 billion funding shortfall over the next four years.
Opposition leaders, including Tory chief Kemi Badenoch and Liberal Democrat Ed Davey, have called for even swifter action, while a delayed government defence investment plan, originally due last autumn, continues to stall key projects like the next-generation Tempest fighter jet.
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