Britain’s defence industry is under siege, but not from the usual suspects. With fears mounting that a key weapons manufacturer could soon fall into American hands, Prime Minister Sir Keir Starmer has made one thing crystal clear: he won’t let Britain’s defence sector be swallowed up by US takeovers.
“We will put Britain first every step of the way,” Starmer declared, reinforcing his commitment to keeping UK defence firms under British control.
His comments suggest a shift towards a tougher stance on foreign acquisitions, even if it means potential friction with the White House. The timing couldn’t be more critical. As Donald Trump signals a dramatic rethink of US military aid to Ukraine, European leaders, including Germany’s new chancellor, Friedrich Merz, are voicing concerns about the continent’s ability to defend itself without American support.
The Battle Over Chemring
At the centre of this brewing storm is Chemring, a British company specialising in missile countermeasures used by the RAF and US Air Force. Reports suggest that US private equity giant Bain Capital has placed a staggering £1.1bn bid to acquire the firm. If approved, it would add Chemring to a growing list of British defence companies that have been snapped up by American buyers, including Meggitt and Cobham.
Speaking at Downing Street, Starmer championed British innovation and technological prowess, insisting that the government’s increase in defence spending to 2.5% of GDP must benefit the UK economy.
“We’re really good at this in Britain. We create, we innovate, and we lead the world in defence technology. We punch above our weight, and we intend to stay in that position,” he affirmed.
When pressed on whether companies like Chemring should remain in British hands, Starmer was unequivocal: “Keep them British, absolutely.”
A New Era of Strategic Independence?
Historically, UK governments have been reluctant to block American acquisitions, trusting in the deep military ties between the two nations. But with Britain seeking greater strategic autonomy, the landscape is shifting.
John Healey, the Defence Secretary, reinforced the government’s position: “We need to reinforce British industry, British innovation, British jobs, British business.”
This marks a significant departure from previous policy. While national security laws allow the government to intervene in defence takeovers, such deals have often been waved through, on the assumption that American ownership poses no threat.
However, that assumption is facing fresh scrutiny. As Britain seeks to chart a course independent of Washington, some question whether critical defence firms should be allowed to slip into foreign hands at all.
The Chemring Test Case
Chemring has played a crucial role in supplying Ukraine with weaponry in its fight against Russian aggression, making its potential takeover a particularly sensitive issue. Last month, shares in the company soared as rumours of Bain Capital’s interest swirled. If the deal goes ahead, it would follow the pattern of other major UK defence firms being absorbed by US giants.
Take Meggitt, for example, which produces key components for Airbus and BAE Systems. Or Cobham, a company whose pioneering air-to-air refuelling technology was pivotal in the Falklands War. Both were ultimately acquired by US firms despite national security concerns.
Back in 2021, then-Business Secretary Kwasi Kwarteng referred the Meggitt and Cobham acquisitions for review. But despite the scrutiny, both deals were approved. In response to growing concerns, the government introduced new rules in 2022 granting it more power to block foreign takeovers of top-secret defence firms. However, whether these powers will be exercised remains to be seen.
The Special Relationship, Stronger Than Ever?
Despite the tough rhetoric on foreign takeovers, Starmer has been careful to stress the enduring strength of the UK-US alliance.
“We must strengthen our relationship with America for our security, technology, trade, and investment. They are, and always will be, indispensable,” the Prime Minister said.
But as Britain seeks to rebuild its industrial base, tensions could emerge. The government’s recent £1.6bn missile deal for Ukraine was framed as a win for British jobs and technology, highlighting the push for homegrown defence capabilities.
Investing in the Future
The government is also reviewing investment rules that some argue hinder defence firms from securing much-needed funding.
Healey noted: “There’s concern about investment funds and investment rules blocking defence firms, so-called ESG [environmental, social, and governance]. The Chancellor and I are assessing these barriers, and we’ll make announcements soon.”
The Treasury has already taken steps to clarify that investing in defence firms contributes to national security and aligns with ESG principles. The question now is whether these changes will be enough to keep British defence companies under UK control.
