Defence sector cautions on spending cutbacks

By John Bowker

LONDON (Reuters) - Britain's defence and aerospace industry is urging European governments not to pay for economic bailouts by slashing defence budgets and programmes.

Concern among the sector has mounted in the run-up to NATO's 60th anniversary summit on Friday following delays to a string of UK projects, including the 4 billion pound new aircraft carrier programme.

Industry executives are also worried about what they see as the parlous state of the country's state finances.

Across Europe, seven nations will decide by July whether to scrap orders for the severely-delayed Airbus A400M military transport plane.

"Bailouts for other sectors provoke concerns in the aerospace industry that money will be diverted from current aerospace investment to fund them," said Ian Godden, Chief Executive of the Society of British Aerospace Companies (SBAC).

"The sector is also concerned about research funding drying up," he added.

Allan Cook, Chief Executive of FTSE 100 defence electronics group Cobham said the grass roots of the industry were at threat.

"I'm bearish on European defence budgets ... Research and Development is the life-blood of the industry, and if governments are not providing resources, they will lose business to India and China," he said.