Babcock has announced that it has secured a five-year contract extension, worth around £1bn, with the UK’s Ministry of Defence (MOD).

The British aerospace, defence and nuclear engineering services firm said that the contract "further underpins" its "commitment and long-term relationship with the British Army".

The news comes as the UK Government stated that it was to increase spending on defence to 2.5% of GDP from April 2027 in the Chancellor’s Spring Statement.

Under the deal, Babcock is set to play a "crucial role in ensuring operating readiness" for the Armed Forces, specialising in "building new vehicles, supporting its fleet and training its soldiers".

In collaboration with the MOD, which has committed to investment in facilities and equipment, Babcock will continue to invest in its 1,600-strong workforce across 20 UK sites.

Chief executive officer at Babcock, David Lockwood, said: “"In a period of increased global instability, more is being expected of our armed forces. This contract extension ensures that Babcock continues to provide the British Army with the tools to do its job, when and wherever they are needed. Our know-how, application of technology and extensive experience in the land domain help ensure that the British Army is ready to fight and win wars."

Defence secretary, John Healey MP, added: "Tanks, armoured vehicles and kit are the backbone of the British Army. We are taking action to ensure the outstanding service men and women of our Armed Forces are properly equipped and ready to respond to ever-changing global threats.  

"Supported by largest sustained increase in defence spending since the Cold War, this substantial investment with Babcock demonstrates how defence is an engine for growth: supporting businesses of all sizes and sustaining more than 1,600 good, well-paid jobs across Britain.

"National security is the bedrock of a successful economy and our Government's Plan for Change."

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