BAE Systems wins £20bn contract to build warships for Australia

Theresa May welcomes 'enormous boost' for UK economy after British firm sees off Spanish and Italian rivals to lucrative contract

The warships will be built in Adelaide, Australia, but will use technology from a number of different UK companies (Getty)

British defence giant BAE Systems has won a £20billion contract to build a new fleet of warships for Australia.

The company will provide nine submarine-hunting frigates as part of a deal that Theresa May hailed as a result of Brexit.

It saw off competition from Italian and Spanish rivals to secure the lucrative contract.

The deal will come as a major boost for UK ministers as they seek to help secure new business for British companies ahead of Brexit.

BAE Systems, which employs more than 83,000 people in 40 countries, was preferred to Spanish company Navantia and Italy’s Fincantieri.

Work on its 6,900-tonne Type 26 submarines only began last year, with the vessels not due to be completed until 2027.

The ships will be built in Adelaide, where around 4,000 jobs will be created, but will include systems manufactured by other UK companies. The deal is believed to be the UK’s biggest naval defence contract in ten years.

Britain has already purchased eight of the next-generation vessels, which are due to be deployed by the Royal Navy in the late 2020s.

Downing Street said Ms May had been directly involved in supporting the bid, including lobbying her Australian counterpart, Malcolm Turnbull, on behalf of BAE Systems.

Welcoming the announcement, Ms May said: “The sheer scale and nature of this contract puts the UK at the very forefront of maritime design and engineering and demonstrates what can be achieved by UK industry and government working hand-in-hand.

“We have always been clear that as we leave the EU we have an opportunity to build on our close relationships with allies like Australia. This deal is a perfect illustration that the government is doing exactly that.

“And while this is an enormous boost for the UK economy, it will also cement our strategic partnership with one of our oldest and closest friends for decades to come.”

Gavin Williamson, the defence secretary, said: “This is the dawn of a new era in the relationship between Australia and Great Britain, forging new ties in defence and industry in a major boost as we leave the European Union.”

Australia is high on the list of countries the UK hopes to do a trade deal with after Brexit. A number of ministers, including Boris Johnson and Liam Fox, have visited the country in recent months in an attempt to help pave the way for such an agreement.

Mr Fox, the international trade secretary, said: “The UK and Australia already enjoy a strong trading relationship worth more than £13bn a year. Today’s announcement is a further boost to this relationship which will create significant opportunities for companies in both countries to deepen their trading ties.

“As an international economic department, we are excited for the opportunities this will bring to both our nations including increased data and information sharing, high-end technology transfer, and collaboration at the cutting-edge of maritime expertise.”

Last week, BAE Systems secured a £150m contract to sell tanks to the US Marine Crops.

The company will initially provide “amphibious combat vehicles” and has options to build a total of 204 tanks as part of a deal that could be worth up to £910m.

Commenting on the successful bid for the Australian contract, Charles Woodburn, chief executive of BAE Systems, said:“BAE Systems’ selection as preferred tenderer for SEA 5000 reinforces our position as a leading designer and builder of complex maritime platforms.

“I am proud that our world class anti-submarine warfare design and our approach to transferring technology and skills to the nations in which we work is expected to contribute to the development of an enduring world-class naval shipbuilding industry in Australia.”