UK prepares long-term funding boost for stealth jet programme

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UK stealth jet funding

Highlights

UK, Italy and Japan are preparing to sign a long-term contract for the Global Combat Air Programme after the current arrangement expires next month.
Japan pressures UK for immediate long-term commitment to GCAP, with Japanese defence minister warning that further delay risks strategic cooperation and political visits.
GCAP, backed by a December 2023 international treaty and employing over 4,000 UK-based staff, aims to rival U.S. military technology and strengthen UK-Japan ties in the Asia-Pacific.

Funding plan and contract timeline

As first reported by Financial Times, the proposed funding would enable the UK, Italy and Japan to sign a long-term contract covering design and development work for the Global Combat Air Programme, according to people briefed on the matter. The current short-term arrangement was announced in March and runs out at the end of next month.

Any agreement is expected to form part of a broader defence settlement and still requires Treasury approval, according to people familiar with the discussions. A long-term contract with industrial partners had been expected by the end of last year, but it is delayed as Britain works through setbacks to its 10-year Defence Investment Plan.

The funding would allow BAE Systems, Leonardo and Mitsubishi Heavy Industries-backed Japan Aircraft Industrial Enhancement Company to continue critical design and development activity. More than 4,000 UK-based staff are already working on the programme and on a demonstrator aircraft intended to test technologies for GCAP.

Pressure from Japan and wider strategic stakes

Tokyo has recently intensified its warnings over the future of the programme as concerns grow that GCAP could be caught up in the UK government's broader debate over higher defence spending. The issue is raised during Home Secretary Yvette Cooper's recent visit to Tokyo, according to officials there.

One official says Japan's defence minister Shinjirō Koizumi is unusually direct in stressing that the UK needs to sign a full long-term contract without further delay, rather than extend the project again on a short-term basis. The same official says uncertainty around Prime Minister Keir Starmer's leadership also puts at risk a planned visit to the UK next month by Japanese Prime Minister Sanae Takaichi.

GCAP is backed by an international treaty signed in December 2023 and is intended to challenge U.S. dominance in military technology through a new stealth fighter equipped with advanced weapons. UK and Japanese officials privately warn that any failure of the programme could damage bilateral ties and weaken both countries' strategic position in the Asia-Pacific region.

The Ministry of Defence says the UK remains committed to GCAP and is focused on working closely with Italy and Japan on the next steps toward a full international contract. The Treasury and Edgewing, the joint venture between BAE, Leonardo and Japan Aircraft Industrial Enhancement, do not immediately respond to requests for comment.

Our earlier article on UK gilt market moves amid Labour leadership uncertainty explained how pressure on Prime Minister Keir Starmer contributed to a risk premium in government bonds, as investors weighed the possibility of looser fiscal rules. It also noted Andy Burnham’s efforts to reassure markets about maintaining spending and borrowing discipline, while highlighting that leadership turmoil can translate into higher borrowing costs and broader execution risk for the UK’s policy agenda.

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UK prepares long-term funding boost for stealth jet programme

Highlights

Funding plan and contract timeline

Pressure from Japan and wider strategic stakes

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