BAE forecasts ‘modest growth’ despite defence cuts
Summary: Europe’s largest defence contractor, BAE Systems, has announced that it predicts ‘modest growth’, despite the recent cuts to defence spending seen across countries worldwide.
The interim trading statement was announced just before Dick Olver hosted his final annual meeting as BAE’s chairman before he retires.
In UK defence, Whitehall sources have suggested that new defence budget cuts could reduce British defence spending to less than 2% of GDP, the level regarded by the United States as the minimum in order to be considered a serious military power.
UK Defence Secretary Philip Hammond has refused to rule out the possibility of Britain spending less than 2% of GDP on defence in the next Parliament following this year’s spending review.
Roger Johnston, analyst at Edison Investment Research, called BAE’s trading statement “a mixed bag of news”, but concluded: “We remain convinced BAE’s future lies in export markets for the foreseeable future, along with the challenges that brings.”
BAE’s Annual General Meeting was protested by anti-arms campaigners mainly concerned with BAE’s involvement in selling weapons to Saudi Arabia. Saudi Arabia, one of BAE’s biggest customers, has been widely criticised for its undemocratic government.
Mr Olver countered that Saudi Arabia may be “conservative” but was a also key ally of the US and UK, saying: “We export nothing to Saudi Arabia without the licence of the UK and US.”
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