UK Defense Stocks Surge on £15bn Spending Boost Despite PMI Slip

UK defense stocks rebounded sharply after the government unveiled an extra £15 billion in spending over four years, lifting the FTSE 350 Aerospace & Defense index nearly 5%. The boost raises annual defense outlays to £79.1 billion by 2029, or 2.7% of GDP. Meanwhile, June manufacturing data showed momentum fading as the S&P Global UK Manufacturing PMI eased to 52.5 from 53.9, below the flash estimate, with new orders slowing as customer stockpiling waned. Output growth remained resilient at its quickest pace since September 2024, though business optimism stayed subdued amid policy and geopolitical uncertainty. Analysts note the defense rally offers near-term support for UK equities but warn fiscal pressures could limit sustained gains.