Britain's new government will seek an early defence win on Tuesday by inviting Canada to join the delayed GCAP fighter jet programme, as European allies push to reduce their reliance on U.S. weapons and military technology.
The announcement coincides with the Farnborough Airshow, the aerospace and defence industry's premier gathering, with wars in Ukraine and the Middle East driving demand for everything from combat drones and interceptor missiles to artificial intelligence-enabled military software.
The event overlapped with new Prime Minister Andy Burnham's first day in office. He named John Healey, who favours hiking the UK defence budget, as finance minister, alongside giving former Health Minister Wes Streeting the defence brief.
The new government's first announcement with foreign partners will be on the Global Combat Air Programme, the stealth fighter being jointly developed by Britain, Italy and Japan, which Canada is expected to join as an observer, marking the first expansion beyond the founding members.
UK DEFENCE STOCKS RISE
British defence stocks including BAE Systems (BAES.L) and Babcock (BAB.L) jumped by 3% and 6% respectively on Tuesday as markets bet the companies would benefit from the new government's willingness to make Britain more war-ready.
Healey, formerly the defence minister, had previously spent months lobbying the former prime minister to lay out a pathway to spend 3% of GDP on defence by 2030, rather than the 2.68% that the government eventually budgeted for.
"As Defence Secretary, John Healey championed British business, recognising the contribution that the defence sector makes to growth and national security," BAE Systems CEO Charles Woodburn said.
"We look forward to continuing to work with John in his new role as UK Chancellor."
Canada is becoming an increasingly important defence partner for European nations as it looks to diversify its defence spending away from the United States and forge closer ties on the continent.
There will be no financial commitment involved in its observer status, but Canada could join the programme more formally in future, sharing the billion-dollar development bill and potentially ordering the jets.
Defence companies made up half of a record 1,600 exhibitors at this year's show, highlighting a shift from the usual dominance of commercial aviation and reflecting how Ukraine and Middle East conflicts have transformed spending priorities.
Exhibitors at the airshow displayed new defence technologies from unmanned fighter jets and hypersonic missiles to spy satellites and AI-enabled weapons systems.
