Defense Firms Add Nearly 4 Billion Pounds After Healey Named Chancellor

John Healey was appointed chancellor in Andy Burnham's government, prompting Britain's largest defense companies to add nearly 4 billion pounds to their combined market value in Tuesday trading, The Independent reported. BAE Systems shares climbed 3.23 per cent, adding about 1.85 billion pounds to its market capitalization, while Rolls-Royce rose 1.24 per cent for a gain of roughly 1.42 billion pounds.

Babcock jumped 7.5 per cent, lifting its value by about 400 million pounds.

QinetiQ advanced 3.9 per cent, worth around 100 million pounds, and Chemring gained 2.6 per cent, adding approximately 40 million pounds. Healey had resigned last month as defence secretary in Sir Keir Starmer’s government. The appointment surprised many Labour MPs and Burnham allies, who had expected home secretary Shabana Mahmood to take the Treasury post.

Andrew Wishart, senior UK economist at Berenberg, said Healey's departure from the Ministry of Defence over funding “suggests that he will raise military expenditure”, although “how he will raise the revenue remains to be seen”. Chris Beauchamp, chief market analyst at IG, said Healey's new responsibilities extend far beyond the MoD.

“As chancellor, he will have many competing demands and won't just be the MoD's man in No 11,” he said.

The defense sector had already posted a prolonged rally as European governments raised military budgets following Russia's invasion of Ukraine. Traders will now watch Healey's first Budget for signs that higher UK defense spending will follow.