BREXIT: Decision to leave EU ‘likely to boost’ UK arms companies

A boost to UK arms companies and their suppliers may be delivered by BREXIT.

Guy Anderson, senior principal analyst at IHS Jane’s, said:

“The 2pc defence spending target every year until 2019 will likely be retained as achieving such a ratio will become that much easier given lower rates of economic growth.

This and the level of political capital the Conservative government has invested in the UK fulfilling NATO obligations means we project the MoD budget will continue to account for over 2pc of GDP for the remainder of this parliament.”

Britain will soon confirm the first orders from US company Boeing for the P-8 maritime patrol aircraft and upgrades to the Apache helicopter fleet at the Farnborough airshow later this month.

Britain is also buying the F-35B fighter and this could become more expensive. According to the Telegraph, another upside to Brexit is that Britain is likely to be freed from EU procurement rules, allowing the MoD to focus its spending on domestic companies. A weaker pound will also make British-made arms cheaper to buyers, meaning they will get more for their money.

The French Defence Minister has stated that defence ties between the UK and France will remain in place following BREXIT.

French Defence Minister Jean-Yves Le Drian said:

“Brexit will not damage in any way the extremely strong defence cooperation that we have with Britain. This partnership exists and will continue to exist. The British Minister (Michael Fallon), who I met this morning, has confirmed this shared wish to continue with this very strong cooperation.”

His comments follow US Secretary of State John Kerry predicting “an even stronger NATO going forward”.

“We have high expectations of a very strong NATO meeting and important deliverables. That will not change one iota as a consequence of the vote that has taken place.”

In Brussels Kerry met NATO Secretary General Jens Stoltenberg.

“After the UK decided to leave the European Union I think that NATO has become even more important as a platform for cooperation between Europe and North America but also defence and security cooperation between European NATO allies.”

A House of Commons briefing paper claims that the direct impact of BREXIT on the UK armed forces is minimal.

The briefing paper states:

“The EU may feel the loss of the UK more acutely because the UK is one of Europe’s largest military powers and is one of the few EU countries capable of taking command of a mission. A UK exit could potentially leave the EU with fewer assets and capabilities at its disposal, although the UK could choose to contribute to EU military missions as a third party state.

Arguably the biggest impact will be a reduction in the UK’s ability to influence the direction of travel for European defence. Exit from the EU will remove one of the strongest voices opposing further defence integration and the creation of what is commonly called a ‘European Army’.”

Further, it is claimed that:

“Exit from the EU will not prohibit the UK from working closely with individual European nations to jointly procure equipment, exercise or deploy together on military operations. Withdrawal negotiations will decide whether the substance of two EU defence directives are retained. These directives are designed to make the EU internal defence market work better and to increase competition in the EU defence sector. Major UK defence companies argued before the vote in favour of Remain.

The prospect of a second referendum on Scottish independence will reignite the debate about the location of the UK’s strategic nuclear deterrent, Trident. The Scottish Government opposes its presence in Scotland. The UK Government has promised a vote on the renewal of the deterrent but no date has been given.”

NATO is a security alliance of 28 North American and European states, established by the North Atlantic Treaty in 1949. NATO’s fundamental role is to protect the freedom and security of its member states.

Britain in NATO is pivotal to the alliance. The alliance may be American-led and American-dominated, but Britain remains a vital anchor. Not only are we a fellow nuclear power, we have been the staunchest and closest military ally of the US, in terms of intelligence sharing, battlefield operations and interoperable hardware allowing the whole alliance to benefit.

Douglas Hurd of the Royal Institute for International Affairs said:

“NATO is one of the principal props which have allowed Britain to punch above its weight in the world.”

Under the auspices of NATO, the United Kingdom has been active around the world and has played a leading role in many conflicts.