Proactive Investors - BAE Systems (LON:BAES) and Rolls-Royce Holdings PLC (LON:RR) are among defence firms likely to bode well from a flurry of approvals for increased security spending last week, analysts have said.
Pointing to Congress’ approval of a new defence bill in the US, alongside UK government plans to bolster nuclear capabilities, Deutsche Bank (ETR:DBKGn) said European firms were set to benefit.
“Last week, there was a flurry of news surrounding defence spending in the western world,” the bank wrote in a note.
“Each by itself may not be eye-catching, but when put together, they provide a clear picture on the direction of defence spending.
“Together, they provided solid evidence of support for defence spending, which is critical for the long-term defence revenue growth thesis in Europe.”
In the US, Congress approved a US$1.2 trillion (£951 million) government funding package, which included a 3% increase in defence spending.
Deutsche noted this was “a big relief for cash inflow for defence companies”.
UK ministers unveiled plans to collectively invest over £763 million in the nuclear industry, alongside BAE, Rolls-Royce, Babcock (LON:BAB) and energy firm EDF (EPA:EDF), meanwhile, following proposals in the Spring Budget to increase defence spending next year by 2.5%.