Trump to push for huge increase in US military spending, defence stocks spike

US President Donald Trump plans to push ahead with a budget that includes a £54bn, or 9%, rise in spending on armed forces, with an equivalent cut for spending on domestic agencies.

Trump's 2018 budget blueprint was sent to agencies on Monday, with the Environmental Protection Agency facing ravaging cuts to its budget, as Trump plans to do away with environmental regulations in order to boost business.

Foreign assistance is another area to face major trimming, but welfare programmes such as social security and Medicare remain surprisingly untouched ahead of a final budget proposal for 2018 due in mid-March.

The President will deliver a speech to a joint session of Congress on Tuesday as he faces increasing pressure from a variety of sources following a tumultuous opening month in the Oval Office.

Trump's press secretary Sean Spicer said on Monday that the administration recognised the need to "tighten it's belt" related to debt.

"Speaking to governors @WhiteHouse @POTUS says his budget will be a public safety & national security budget: will include military increase," Spicer tweeted. "On budget @potus says we are going to do more with less, with $20 trillion debt country needs to tighten it's belt."

The House of Representatives and the Senate ultimately have final say on the destination of public funds, but Trump's move will aim to begin the difficult negotiation process ahead with Republicans and Democrats.

Trump had previously criticised overspending from Barack Obama's administration, reserving particular scorn for the F35 fighter jet programme, a contract awarded to defence firm Lockheed Martin.

"The F-35 program and cost is out of control," Trump tweeted in December. "Billions of dollars can and will be saved on military (and other) purchases after January 20th."

Lockheed is expected to reduce the cost of its fighter jets to below $100m per plane, freeing up defence funds for other purposes.

As the news filtered out on Monday, shares in London-listed defence providers such as BAE Systems, Cobham, Meggitt, Rolls-Royce, Qinetiq and Ultra Electronics saw their shares spike late in the session.