Rolls-Royce and BAE Systems have raised their profit forecasts as governments increase defence spending amid heightened global security concerns. The upgrades underline how the sector is benefiting from demand for military equipment, surveillance systems and weapons, alongside Rolls-Royce’s recovery in civil aviation and growing demand for power generation.

Rolls-Royce now expects underlying operating profit of £4.7bn to £4.9bn this year, up from £4bn to £4.2bn, and its shares rose 5.5%. BAE expects earnings growth of 10% to 12%, supported by contracts including support for 20 Typhoon aircraft for Turkey, expanded US missile-component production and a £5.9bn UK submarine contract.