We won't let US buy up Britain's defence industry, says Starmer
The British defence industry will be protected from more US takeovers, Sir Keir Starmer has signalled, amid fears one of the country's key weapons manufacturers is about to fall into American hands.
The Prime Minister vowed to 'put Britain first every step of the way' as he praised companies in the industry and said it was important to 'keep them British'.
His comments suggest the UK may take a more muscular approach to defence takeovers than in the past – potentially risking a clash with the White House.
Donald Trump's moves to force Ukraine into a peace deal and unpredictable brand of diplomacy have stoked fears in European capitals that the Continent can no longer rely on American support or equipment.
There have been calls for independent rearming against the Russian threat from senior figures including Friedrich Merz, the new chancellor of Germany, who said last month that his top priority 'will be to strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the USA'.
It comes amid reports that US private equity firm Bain Capital has tabled a £1.1bn bid to buy Chemring. It makes crucial countermeasures to defend RAF and US Air Force jets against missiles, potentially adding to a long line of defence companies that have been snapped up by US firms.
Speaking at an event in Downing Street, Sir Keir said it was vital that the Government's decision to lift defence spending to 2.5pc of GDP 'should be used to boost the British economy'.
He said: 'We're really good at this in Britain. We're really good at creating things, making things. We're front of the game when it comes to AI and technology. We punch above our weight.
'We want to make sure that we stay in that position.'
Asked if it was important to ensure companies such as Chemring remained British, Sir Keir said: 'Keep them British, absolutely. We're really proud of what we do.'
John Healey, the Defence Secretary, added that the increase in defence spending highlighted a 'need to reinforce British industry, British innovation, British jobs, British business'.
Mr Healey said: 'You see exactly the same concern from my counterpart Pete Hegseth, over in the US. You build up the deterrent strength and your war fighting strength of your forces by making sure that you've got a strong, innovative industry behind them.'
Although the Government has the power to block defence takeovers on national security grounds, it generally waves US purchases through.
In the past, supporters of such deals argued that the extremely close military ties between the two countries meant that American owners could be relied upon to act responsibly and did not pose a security threat.
However, such claims are likely to come in for more criticism in the future given Britain's attempt to carve out strategic autonomy so it can act independently of the US if needed.
Chemring, which has made weapons used in Ukraine's war against Russia, risks being an early test case. Shares in the business jumped last month amid rumours that Bain was ready to swoop on the FTSE 250 company .
If a deal proceeds, Chemring would join a string of UK players that have fallen into American ownership. This includes Meggitt, which supplies key defence components for companies including Airbus and BAE Systems as well as Cobham, which played a key role in the 1982 Falklands War because of its pioneering air-to-air refuelling technology.
Kwasi Kwarteng, the former business secretary, referred the proposed acquisition of Coventry-based Meggitt by Parker-Hannifin and Ultra Electronics by Cobham to regulators in 2021 over national security concerns. Both deals were ultimately approved.
However, the Government introduced new rules in 2022 that technically give it more powers to quash deals amid rising concerns about the prospect of top-secret defence firms being in the hands of foreign owners.
Sir Keir told Parliament on Monday that the Government wanted to 'fundamentally rebuild British industry' as he said that a £1.6bn missile deal for Ukraine would be supporting British jobs, skills and finance. However, he also insisted the so-called Special Relationship with the US was more important than ever.
'We must strengthen our relationship with America for our security, technology, trade and investment. They are and always will be indispensable,' the Prime Minister insisted.
Sir Keir said earlier in the day that the UK 'punched above our weight' on defence.
He said: 'We're investing in British pride, and I promise you this, we will step up together to lead the world on the challenges in this era, this Government will put Britain first every step of the way, the next generation of this country, the businesses that are the backbone of our economy.'
Mr Healey added that extra defence spending would be used to produce more weapons for troops on the ground which he described as 'not good enough' at the moment.
He said: 'What we want to do is draw that innovation into production and then get it into the hands of our war fighters. We've been good at the first, [but] we haven't made the bridge and we are poor at the second, not good enough.
'And we want to do better for our frontline forces, so the increase in defence spending will be better value for British taxpayers and better for British troops as well.'
The Defence Secretary also hinted that investment rules could be relaxed further to pave the way for more UK spending in the private sector.
Mr Healey added: 'That concern about investment funds and investment rules blocking defence firms - so called ESG [environmental, social, and governance]. The Chancellor and I are doing some joint work on that. We're assessing the barriers to investment into defence and security, and we'll make announcements on that later.'
The Treasury took steps last year to confirm that investing in defence companies 'contributes to our national security' and 'is compatible with ESG considerations'.
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