The UK and Australia have appointed manufacturer BAE Systems for a multibillion-pound contract to build a fleet of next generation nuclear-powered submarines in a boost for Britain’s defence sector.
BAE, alongside domestic defence firm ASC Pty, is expected to deliver the vessels in the early 2040s as part of the Aukus security pact with the US and UK.
UK defence secretary Grant Shapps and Australian deputy prime minister Richard Marles are due to formally announce the decision on Friday.
Marles told a press conference on Thursday that the roadmap for the fleet of SSN-Aukus subs, which will be used by both countries’ navies, was “progressing at pace”.
Shapps said the deal would bring “security and prosperity to our two nations”, adding: “In a more dangerous world, today’s announcement symbolises the huge confidence our close partner Australia has in our world-leading defence industry, including companies such as BAE Systems and Rolls-Royce.”
The Ministry of Defence said Australia would invest £2.4bn over a decade in the UK’s submarine industrial base. The move is set to double the size of Rolls-Royce’s submarine facilities in Derby and create 1,170 jobs.
BAE and ASC are already premier defence contractors in their home countries. BAE’s shares are up 43 per cent in the last year, with its order backlog reaching record levels in 2023 from higher defence spending amid the war in Ukraine and rising geopolitical tensions globally.
Charles Woodburn, BAE’s chief executive, said the latest deal cemented the firm’s status “as a key player in Australia’s maritime enterprise and wider defence landscape”.
Australia signed the Aukus partnership in September 2021 as part of efforts by the US and UK to bolster their presence in the Indo-Pacific region amid the growth of China’s military power.