BAE leads surge in defense stocks as Germany ramps up military spending Business

In Europe, the share price of Italian aerospace and defense giant Leonardo soared 14% to a post-Covid high and Rheinmetall in Germany jumped 26% to an all-time high.

Mr Scholz warned “we are in a new era” following the invasion of Ukraine as he pledged to counter Russian aggression by increasing military spending.

“We will have to invest more in the security of our country to protect our freedom and our democracy,” he said on Sunday.

Chloe Lemarie, an analyst at Jefferies, said non-US NATO countries needed to increase their defense budgets by 25% to meet the goal of spending 2% of GDP on the military.

She said defense companies would “benefit from higher spending across the board and support from their own countries being sent to Ukraine”, adding that “defence is now a priority for all European investors”.

She added: “It is clear that Germany represents the greatest potential for increase in absolute terms… Apart from NATO, Sweden, Finland and the countries of Eastern Europe also seem likely to increase. lead to a significant acceleration of defense spending in the years to come.

JPMorgan analysts said Germany made a “game-changing” announcement pledging to significantly increase defense spending.

The United States has long been frustrated by the lack of military spending by NATO countries, with Germany long resisting pressure to increase its defense budget.

Members have pledged to reach a target of 2% of GDP by 2024, but are expected to increase spending in a more aggressive Kremlin.