BAE Systems boosts UK economy by £10bn

BAE Systems reveals the full extent of its contribution to the economy as the UK defense industry is besieged by foreign bidders

BAE Systems revealed the full extent of its contribution to the economy as the UK defense industry is besieged by foreign bidders.

According to research by Oxford Economics, the contractor supported 143,000 UK jobs and generated more than £10 billion for UK GDP in 2020.

This corresponds to 0.5 percent of the entire British economy.

Spotlight: BAE Systems supported 143,000 UK jobs and generated more than £10bn for UK GDP in 2020

The company employs 35,300 people in the UK – more than 40 per cent of them in disadvantaged communities.

Britain’s largest defense group and many of its rivals are credited with playing a key role in the leveling-up agenda.

But the broader defense and aerospace industry has been targeted by a string of foreign buyers – with firms including Cobham, Ultra Electronics and Meggitt falling victim to bidders in multi-billion pound deals.

Business Secretary Kwasi Kwarteng will face a major test of his approach to takeovers in sensitive industries next week when he is presented with a report from the Competition and Markets Authority (CMA) on private equity giant Advent International’s £2.6 billion swoop Ultra Electronics is submitted.

Kwarteng commissioned the CMA to investigate the deal last year.

Politicians and pundits have urged the Business Secretary to block Ultra’s connection or impose strict restrictions as the company makes critical equipment such as submarine-hunting sonobuoys, which will be key to keeping Britain safe at sea for years to come could be. Tory grandee Lord Heseltine, former Royal Navy chief Admiral Lord West and Defense Committee chairman Tobias Ellwood are among those who have criticized the ultra deal.

Ministers were given the power to intervene in foreign takeovers earlier this month. The National Security and Investment (NSI) Act is forcing the government to review deals in 17 sensitive industries.

These include energy, artificial intelligence, nuclear power, space and advanced robotics.

The acquisition of artificial intelligence specialist Blue Prism was approved by shareholders this week and is expected to be one of the first deals to be called off under the law. Ultra’s investigations began under earlier legislation, the Enterprise Act of 2002, and as such will not be accounted for under the NSI laws. BAE is one of only two companies – along with Rolls-Royce – that cannot be sold to foreign bidders because the government owns a so-called “golden stock”. The £18 billion company has 50 offices in the UK and employs around 90,000 people worldwide. In 2020, it exported goods and services worth £3.9 billion – equivalent to 0.7 per cent of all UK exports.

Charles Woodburn, Chief Executive of BAE Systems said, “The investment we are making in high quality jobs, research and development and our extensive supply chain supports thousands of businesses and tens of thousands of people and the communities in which they live.”

Secretary of Defense Procurement Jeremy Quinn said BAE is helping us “make the country a better place by supporting tens of thousands of jobs”.

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