UK inks £10bn warship deal with Norway, defence stocks pop

(Sharecast News) - Defence stocks were in the green in London on Monday, after the UK secured its largest-ever warship export deal. Norway has agreed to buy at least five British-built Type 26 frigates in a £10bn agreement designed to strengthen NATO's northern defences and support thousands of UK jobs.

The deal, announced on Monday, will see the Royal Norwegian Navy operate identical Type 26 ships alongside the Royal Navy in a combined fleet of 13 anti-submarine warfare frigates.

Eight vessels are already under construction in Glasgow for the UK, with Norway's order to be built on the Clyde in the coming years.

Deliveries are expected from 2030, with both governments saying the agreement will not delay the Royal Navy's schedule.

The Ministry of Defence said the programme would sustain 4,000 UK jobs into the 2030s, including more than 2,000 at BAE Systems' shipyards in Glasgow, and support over 400 British companies across the supply chain.

It came as the UK looked to boost defence manufacturing exports and deepen cooperation with NATO allies amid rising tensions with Russia in the North Atlantic and Arctic.

Prime minister Sir Keir Starmer called the agreement "a clear example of our Plan for Change, creating jobs, driving growth, and protecting national security for working people."

Defence secretary John Healey said the partnership would see the two navies "train, operate, deter, and if necessary fight together," adding that the warships would "hunt Russian submarines, protect our critical infrastructure and keep both our nations secure."

Norway's Prime Minister Jonas Gahr Støre said London had been chosen after a competitive process involving France, Germany, and the US, calling the partnership "a historic strengthening of defence cooperation" and essential as Europe faces its "most serious security situation since World War Two."

The Type 26 design, already selected by Australia and Canada, reportedly features advanced sonar, weapons and communications systems and was optimised for anti-submarine warfare while retaining flexibility for future upgrades.

Shares in BAE Systems rose 2.59% to 1,803p in early trading following the announcement, while Rolls-Royce Holdings gained 1.73% to 1,088.5p and Babcock International advanced 2.95% to 1,046p.

Reporting by Josh White for Sharecast.com.