BAE to sign Navy deal by recess

BAE Systems, the Ftse 100 defence giant, and the Government, are aiming to secure a 15-year shipbuilding agreement by Parliament's summer recess next month.

It is understood that the parties want to sign the deal by 17 July. The contract would see BAE supply the UK's naval shipbuilding needs until 2024. The deal will allow VT Group, the Ftse 250 company, to exit BVT, its joint venture with BAE.

VT has agreed to sell its 45 per cent stake in the company for £380m, once the Ministry of Defence and BAE have agreed their deal. VT is the old Vosper Thornycroft, which will be exiting shipbuilding after 150 years. Its chief executive, Paul Lester, is keen to concentrate on support services work, and held a presentation for analysts last week on opportunities in the UK's burgeoning nuclear power sector. Lord Mandelson, the Business Secretary, in a presentation to the meeting, said: "The government's ambition for nuclear is clear, and it is unwavering. We are committed to the clarity and regulatory framework that the industry needs."