BAE Systems plcUK defense budget boost increases demand for BAE Systems' products and services.
The UK government has unveiled a £15 billion (approximately $20 billion) boost to its defense budget over the next four years as part of the Defence Investment Plan, lifting annual defense spending to £79.1 billion, or 2.7% of GDP, by 2029. Prime Minister Keir Starmer's announcement sent major UK defense stocks higher on July 1, with BAE Systems and Rolls-Royce seen as primary beneficiaries. BAE Systems ended 2025 with a record backlog of £83.6 billion and 10% year-over-year sales growth, while Rolls-Royce's defense arm had a £17.4 billion order backlog and 8% underlying revenue growth. The plan allocates over £5 billion to a drone transformation and a shift toward autonomous systems, AI, and cyber capabilities, with total cumulative spending under the plan reaching nearly £300 billion by the end of the decade. Three defense ETFs with exposure to UK contractors are in focus: the Global X Defense Tech ETF, the Themes Transatlantic Defense ETF, and the Tema International Defense ETF.
BAE Systems plcUK defense budget boost increases demand for BAE Systems' products and services.
Rolls-Royce Holdings PLCUK defense budget boost increases demand for Rolls-Royce's defense arm.
Elbit Systems Ltd