P.M. BRIEFING : Defense Stocks Fall in London
Stocks of defense-related industries plunged on the London International stock exchange today in response to the British government’s announcement it will slash an estimated $1.03 billion from the military budget.
Defense Procurement Minister Alan Clark said in Parliament late Monday that inflation had placed extraordinary pressure on the military’s running costs, prompting that $1.03 billion be trimmed from the $36.25-billion defense budget.
The government also said the cuts were due to the easing of East-West relations.
Hardest hit by the news was British Aerospace, which lost a $906-million order for 33 Tornado fighter-bombers. British Aerospace stock tumbled 37 cents a share to $8.60, but managed to stage a slow recovery around midday.
Setbacks were suffered by other companies linked to the manufacture of Tornadoes, a nuclear-capable aircraft designed for attacking the Soviet Union. Tornadoes are built in the northwestern English town of Warton in cooperation with Italian and West German firms.
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