London, Feb 16, 2026, 16:19 GMT — Regular session
- Babcock shares were up more than 3% in London trade, recovering some ground after last week’s pullback. (Investing)
- The move followed Prime Minister Keir Starmer saying Britain must “go faster” on defence spending amid reports ministers are weighing an earlier 3% target. (Reuters)
- Markets now look to the government’s spring forecast on March 3 for clues on fiscal headroom and priorities. (Gov)
Shares in Babcock International Group PLC (BAB.L) rose on Monday, as defence-linked names gained on fresh talk of higher UK military spending. The stock was up 3.2% at 1,340.5 pence and is down 6.3% over the past five sessions. (MarketScreener)
The move matters now because investors are trying to price a shift from rhetoric to budgets. Defence contractors can trade like policy proxies in London when spending plans change.
Babcock, a FTSE 100 company, provides through-life engineering and technical support for customers’ critical assets, spanning naval, land, air and nuclear operations. (Babcock International Group)
Prime Minister Keir Starmer said Britain needed to “go faster” on defence spending after a BBC report said the government was exploring bringing forward a target to spend 3% of economic output on defence to 2029. Britain said last year it would raise defence spending to 2.5% of GDP (gross domestic product) by 2027 and aim for 3% in the next parliament; NATO estimates put Britain’s defence spend at 2.3% of GDP in 2024. The Office for Budget Responsibility has estimated that moving to 3% would cost an extra 17.3 billion pounds a year in 2029-30, and the government has yet to publish a delayed defence investment plan laying out priorities. (Reuters)
Other defence-exposed stocks in London also advanced on the headlines, including BAE Systems and Rolls-Royce. (City AM)
Babcock added company-specific colour in an exchange filing on Monday, disclosing a share buyback (repurchasing its own shares). It said it bought 8,045 shares on Feb. 13 at an average price of 1,295.0781 pence; since July 24, 2025 it has bought 8,006,393 shares for about £89.5 million and holds 6,203,433 shares in treasury. (Sharecast)
Daniela Hathorn, a senior market analyst at Capital.com, said higher defence outlays can support activity, but it “depends critically on how the spending is financed”. (The Guardian)
But the downside case is easy to sketch. If the spending timetable slips, or the funding mix spooks bond markets and forces cuts elsewhere, the sector’s bid can fade quickly — and buyback headlines won’t carry the stock on their own. (The Guardian)
The next hard date on traders’ screens is March 3, when the Office for Budget Responsibility is due to publish an updated economic and fiscal outlook. Investors will be watching for any signposts on how a faster track to 3% defence spending would be paid for, and what gets prioritised. (Obr)
