LONDON (Reuters) -Britain handed BAE Systems (LON:BAES), the country's biggest defence company, a 280 million pound ($361 million) order for munitions, seeking to ramp up production to replenish its stockpiles and ensure supply for Ukraine.
Britain and its NATO allies have sent millions of rounds of ammunition to Ukraine, sparking concern about domestic stock levels, and British Prime Minister Rishi Sunak said the new contract would address this risk.
BAE will increase UK production capacity for 155mm artillery ammunition eightfold as a result of the new order, allowing a jump in output of what is NATO standard munitions.
Sunak, who has pumped an extra 5 billion pounds into Britain's military over the last year, will call on other leaders to boost defence spending to 2% of GDP at a key NATO summit in Lithuania later on Tuesday.
The new order includes an option for the government to increase its value to more than 400 million pounds.
BAE said it would create 200 new jobs in the North of England and South Wales as it adds an additional machining line at one location and a new explosive filling facility at another.
"This multi-million pound investment will enable us to significantly ramp up production and sustain vital sovereign capability to deliver cutting-edge munitions," BAE Chief Executive Charles Woodburn said in a statement.
Britain in March said it would add a total of 11 billion pounds to its defence budget over the next five years.
Of the 280 million pound contract, 190 million pounds will fund 155mm artillery ammunition, while the balance is for 30mm medium calibre rounds and 5.56mm ammunition.
($1 = 0.7777 pounds)