US President Donald Trump’s plan to increase military spending has given a major boost to British weapons manufacturers in the stock market.
Meggitt, Rolls-Royce, BAE Systems, and Babcock were some of the companies that reported soaring stocks on Tuesday, a day after Trump announced a "historic" increase in the Pentagon budget.
Speaking in a meeting with dozens of state governors at the White House, Trump said Monday that the decision was aimed at rebuilding America’s "depleted military."
The following day, Babcock, a UK-based company with more than 35,000 employees worldwide, reported a 4-percent increase in shares.
The figure for BAE Systems, a long-time Pentagon partner, was also up 2.2 percent,
The same was true for Thales, a French company, which posted a net profit of 946 million euros last year.
“The talk regarding military and infrastructure spending raised expectations towards Trump's speech to the Congress later today, lifting the dollar and Treasury yields,” Shin Kadota, senior strategist at Barclays, said.
According to a White House budget official, Trump plans to increase military spending to some $603 billion by slashing $54 billion from non-military spending.
The amount nearly matches the military spending proposed by Senator John McCain, chairman of the Senate Armed Services Committee.
This is while, according to Representative Mac Thornberry, the House Armed Services Committee chairman, even the new budget is not going to be enough to repair the damage done by the administration of former president Barack Obama.
“Over the course of the Obama Administration, our military funding was cut 20 percent while the world grew more dangerous,” Thornberry said in a statement.
“While we cannot repair all of the damage done by those cuts in a single year, we can and should do more than this level of funding will allow,” he added.
It was announced last year that Britain had become the second biggest arms dealer in the world.