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ALEX BRUMMER: Don’t let overseas looters erode British defences

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Rarely does the choice of a non-executive director lead to higher share prices. The selection of former Cabinet Secretary and NATO representative Lord Sedwill on BAE Systems’ board of directors is a rare exception.

Russia’s unprovoked and vicious war on Ukraine is proving to be an economic shock as damaging as the Covid pandemic.

It has turned an already dangerous rise in inflation into a cost of living crisis fueling the national narrative, with railway workers’ strikes and unrest in the transport and public sector.

Ukraine fears: BAE’s recent trade update highlights NATO’s pledges of increased defense spending

However, Britain’s robust defense and aerospace industry will benefit from Boris Johnson’s willingness to go the extra mile in assisting Ukraine militarily.

BAE’s recent trade update alluded to this, pointing to NATO’s pledges of increased defense spending.

An uncertain world – from the Baltic States to the Middle East and Taiwan – is helping the British defense sector.

Sedwill will have been out of government for two years by November when he joins BAE. That should prevent too many complaints about conflicts. That won’t stop the critics who are usually against Britain’s defense sector.

They forget how hugely important it is to Britain’s innovation, R&D, manufacturing and export capabilities.

In this context, Business Secretary Kwasi Kwarteng’s decision to waive the sale of Ultra Electronics to private equity minds Advent is a betrayal. Ultra’s sonobuoy technology helps NATO monitor Russian submarine traffic.

Kwarteng didn’t have to look beyond the Advent-owned Cobham defenestration to know what he’s dealing with.

A series of pledges intended to protect Ultra’s national security have been obtained. The UK retains rights, similar to a gold share, in two secure companies created from Ultra. t

hat may look comforting. But it doesn’t account for the disastrous impact of Ultra’s piling up of debt (when interest rates rise) or the indifferent, short-term behavior Advent has exhibited in the past.

The Ultra sale is especially painful in the midst of a European conflict. The opportunities for the UK are huge, as shown by BAE’s £46bn order book.

Only BAE has 89,000 employees and is the prime contractor for submarines and plays a major role in making advanced fighter aircraft, including the Eurofighter Typhoon. Spain has just revealed it is adding another 20 Typhoons, dominated by British technology, to its air defenses.

At a time when rising borrowing costs have clouded equity markets, BAE and the defense sector are among the exceptions.

BAE shares are up 28 percent this year and it makes sense that it, and the other British defense contractor Rolls-Royce, are protected from foreign takeovers by ‘gold’ stocks.

That has not been the case for the rest of the sector, which is under siege by overseas looters.

They must be firmly repelled.

pension rights

As a great admirer of Jim O’Neill and his work for BRICS (bit of a shame about Russia!)’.

As the Institute for Fiscal Studies has pointed out, raising the state pension age to 66 put a quarter of pre-retirement workers in poverty.

After dropping the “triple lock” manifesto pledge last year, the Tories had a duty to set things right amid the rising cost of living.

Former pensions minister, Baroness Altmann, notes that while public sector workers will struggle to achieve an inflation-matching pay increase in 2022, they should be comforted by the fact that their pension plans will be increased by annual CPI -adjustments.

How would O’Neill fare on £9,500 a year, which is one of the lowest state pensions in the developed world?

boardroom gluttony

The vast majority of the FTSE 100’s top executives had the good graces of keeping their wage and bonus demands to a minimum during the pandemic.

The railmen’s dispute with Network Rail and the rail operating companies illustrates why they should do it again.

It’s not good to watch transport bosses fill their shoes as they try to calm down the wage demands of colleagues.

In difficult times, increases in boardroom compensation packages – which are already far too high – must be aligned with the rest of the workforce.

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