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Should I invest in nuclear deterrents?

30/04/2024

In late March, Rishi Sunak announced plans to invest £200m into nuclear deterrents and the UK’s civil nuclear industry. 

As a result of the government’s strong nuclear energy targets – which, they say, “will keep us safe, keep our energy secure, and keep our bills down for good” – they predict that 123,000 new nuclear workers will be needed by 2030. 

But is it a sector that individual investors should choose, too? 

 

Grand plans for UK nuclear deterrents

The plans set out by Sunak include partnering with major businesses in the sector – including Babcock International Group PLC, EDF, Rolls Royce Holdings PLC and BAE Systems PLC – to invest at least £763m into education, jobs and skills in the nuclear sector by 2030. There are also plans for significant investments in Barrow-in-Furness, where the Dreadnought Class nuclear deterrent submarines are made. 

The first of the four new ballistic missile submarines is set to enter service in the early 2030s, with a programme also in place to replace the existing nuclear warhead. These plans are impressive – but are they realistic?

 

Spiralling costs and unrealistic deadlines

FT.com reports that the National Audit Office has rated some parts of this programme as red, meaning that their delivery is unlikely to be achieved by the deadline. 

What’s more, in 2019 the Nuclear Information Service think-tank calculated the total renewal costs of Britain’s nuclear defence enterprise to be £172bn – which includes running costs of £3bn per year. 

While the government claims that funding for the deterrent is ringfenced and that it is within budget, the fact remains that the UK is using ageing deterrents and has a way to go to meet its targets. The National Audit Office, in fact, suggests that the UK’s nuclear deterrent programme may need a further £8bn over the next ten years alone: a very different picture from the one that has officially been painted.

 

“Stable Rise Limited is not authorised or registered by the Financial Conduct Authority. The marketing materials are not intended to provide financial advice nor promote any individual financial products.”

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