Shares in Rolls-Royce, Babcock and BAE Systems rose on Monday morning after reports that the Chancellor, John Healey, will fund defence investment through the National Wealth Fund and the British Business Bank, City AM reports. City AM did not give the size of the moves.
The Times has reported that the money would come from long-term borrowing that would sit outside the fiscal rules scorecard. The Treasury has still not confirmed the route or how it would be treated under the rules.
City AM cites an OBR estimate that reaching 3% of GDP on defence would need an additional £17.3bn in 2029-30. Healey has set out an ambition to spend 3%. The UK currently spends around 2.6% of GDP on core defence, according to PA. The £17.3bn figure has not been independently checked.
The Shadow Chancellor, Andrew Griffith, told City AM that "the Chancellor is dithering over finding the money to pay the country's insurance premium".