Major UK defence contractors Rolls-Royce and BAE Systems have signalled stronger financial performance for the coming period, attributing the positive outlook to a sustained increase in global military budgets. As investors react to the news, both companies expect to benefit from a geopolitical climate that has necessitated higher spending on security and weaponry.
Automotive Sector Caution
While the defence sector enjoys a rally, the UK automotive industry is adopting a more cautious stance. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), indicated that carmakers are postponing final decisions regarding investments in British factories. The industry is currently awaiting a relaxation of regulations concerning electric vehicle sales before committing to new capital projects.
Despite some operators with existing UK footprints considering new models, investment has been stalled pending regulatory clarity. The contrasting fortunes of the defence and automotive sectors come as the financial markets also await the latest interest rate decision from the Bank of England.
Source: The Guardian