2,500 UK jobs safeguarded as BAE and Matra win key £800m missile contract

More than 2,500 UK jobs were secured yesterday after a European consortium led by BAE Systems won an £800m missile contract to arm the Eurofighter.

The contract, awarded after the most politically intense procurement battle for decades, will safeguard a total of 5,000 jobs across Europe and break the American monopoly on long-range missiles.

The six-nation Meteor Consortium led by Matra BAE Dynamics beat off fierce competition from Raytheon, the US defence giant, which had been supported directly by Bill Clinton. President Clinton wrote at least three times to Tony Blair urging him to select the Raytheon missile.

But, announcing the contract in the Commons yesterday the Defence Secretary Geoff Hoon said the Government had decided that Meteor offered "the best overall value for the tax-payer".

In a further boost to the European defence industry Mr Hoon said that Britain would go ahead with a £3.5bn deal to purchase 25 Airbus A400M strategic airlift aircraft to replace the ageing Hercules fleets.

The A400M programme will secure 10,000 UK jobs, including 3,400 at BAe's Filton, Broughton and Prestwick sites.

As a sop to the Americans Britain is ordering £200m-worth of Raytheon missiles to arm the Eurofighter when it first comes into service and until the Meteor is available.

Britain will also lease four C17 military transport aircraft from Boeing worth £500m to meet its short-to-medium term needs until the A400M is ready towards the end of this decade.

Mr Hoon warned that Britain would not select the A400M at any cost, saying the programme had to be "affordable and manageable".

He told MPs "we hope that we can sign a contract for the A400M urgently but this must be based on a realistic figure for the purchase".

Alan Garwood, deputy chief executive of Matra BAe, heralded the Meteor consortium's victory as "tremendous news for UK jobs for the UK economy and for the UK's defence capability". He said the choice of Meteor would break a 30-year-old US monopoly and enable Europe to export the Eurofighter wherever it wanted without fear of a US veto.

The initial contract to arm the Eurofighter will safeguard 2,500 jobs in Europe including 1,200 in the UK. But Meteor executives believe that export orders could open a market worth £5bn for as many as 1,000 aircraft.

The Meteor programme brings together the UK, France, Germany, Italy, Spain and Sweden. Apart from Matra BAe, 15 other UK companies stand to benefit.