Rapid adaptation required in defense industry: The evolving combat landscape necessitates adjustments - according to ALEX BRUMMER
In a significant development for the UK, the reopening of the South Crofty tin mining facility in Cornwall is underway. The National Wealth Fund has invested £28.6 million in this project, which is expected to create 1,300 jobs in the region, as suggested by Rachel Reeves [1].
However, contrary to some expectations, the reopening of South Crofty is not a high-tech vision of a future Britain. Instead, it represents a return to traditional industries, albeit with a potential focus on green transformation, as described by the Chancellor [1].
Meanwhile, in the defense and aerospace sector, the US-EU trade deal is shaping the landscape. The deal is expected to boost US defense manufacturers, such as Lockheed Martin and Raytheon, by increasing EU procurement of US military equipment [3][5]. The EU has agreed to purchase an additional $750 billion in US energy products and military equipment over the coming years, directly supporting these companies [1][3][5].
On the other hand, European defense manufacturers, like BAE Systems, may face challenges due to the 15% tariff ceiling imposed on most EU exports, putting EU defense goods at a price disadvantage in the US market [1][4]. The deal also promotes reshoring and local sourcing in the US, potentially reinforcing the manufacturing footprint and supply chains of US defense companies like Lockheed Martin and Raytheon [2].
The Geelong Treaty between Britain and Australia is another significant development. This treaty will lead to the construction of a new class of hunter-killer submarines in Barrow-in-Furness and Adelaide [1]. British companies such as BAE, which operates the Royal Navy shipyards, and Rolls-Royce, which manufactures the nuclear turbines that power advanced submarines, are set to benefit from this construction [1].
Beyond the UK, UK sonar detection systems have played a role in protecting Western shipping in the Red Sea from the Iran-supported Houthi rebels in Yemen [1]. Meanwhile, Elon Musk's Starlink satellites have been vital in Ukraine's defense from Russian weaponry [1].
In the realm of personal finance, several DIY investing platforms, including AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine, and Trading 212, have been mentioned [1]. Affiliate links may earn commissions for This is Money, but this does not affect their editorial independence [1].
It's worth noting that the increase in stamp duty has had a significant impact on the housing market. While it has been effective in stemming house price inflation, with values rising at just 1.3 percent, it has seriously hurt first-time buyers, with 41 percent now liable to pay against just 19 percent before April 2025 [1].
The shrinkage of defense budgets in the post-Cold War era led to a concentration of defense manufacturing capability in few hands [1]. This concentration, coupled with the recent takeovers of UK defense and aerospace groups, has led to the UK's strategic edge being blunted [1]. However, valuable tech systems ended up in uncertain hands following the takeover by Cobham - Advent private equity in disguise - in July 2021 [1].
The US-EU trade deal is not considered ideal by France and the markets [1]. The deal impacts defense stocks and manufacturing capabilities by increasing US exports of defense equipment to the EU and encouraging investment in the US, while imposing tariffs on many EU goods. This dynamic likely benefits US defense contractors like Lockheed Martin and Raytheon by creating a larger European market through increased EU purchases of US military equipment and expands their manufacturing opportunities via increased investment in the US [1][3][5].
[1] This is Money [2] Financial Times [3] Wall Street Journal [4] Reuters [5] Bloomberg
- Despite the reopening of the South Crofty tin mining facility not being a high-tech vision, the National Wealth Fund has invested in this traditional industry, demonstrating an interest in investing in the UK's business sector.
- In the realm of personal finance, one might consider investing in stocks of companies like AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine, and Trading 212, as they are notable DIY investing platforms.
- The US-EU trade deal has implications for the finance and business sectors, as it encourages investment in the US and increases US exports of defense equipment to the EU, which may benefit US defense contractors such as Lockheed Martin and Raytheon.
- Beyond traditional industries like mining and defense, technology plays a crucial role in modern business, with companies like Elon Musk's Starlink contributing to the protection of shipping and national defense, such as in Ukraine and the Red Sea. Meanwhile, the UK's property market has been affected by changes in finance policies, like the increase in stamp duty, which has impacted first-time buyers.
