BAE Systems: Defence giant says record US government shutdown could delay payments
Defence giant BAE Systems has warned that the longest US government shutdown in history could delay contract funding and payments if it continues without resolution.
Europe’s biggest defence contractor said that while the lengthy shutdown had not yet had any “material” effects on its US business, there could be an impact on contracts before the end of the year.
It said: “We are encouraged by the momentum in Congress to end the US government shutdown, especially the positive actions of this week.
“To date, we do not see material effects on our US business.
“If the shutdown persists, delays to contract funding and timing of payments before year-end are possible.”
There are hopes the US government shutdown could now be heading for resolution, with a spending bill finally passed by the US senate in a move that could bring it to an end.
But the issue will now move to the House of Representatives, with the lower chamber of Congress expected to vote this week on the funding measure.
The six-week shutdown has already taken a severe toll on the US economy, with around 1.25 million federal workers missing at least one or two of their salary payments, while thousands of flights have been cancelled and government contract awards have slowed.
The Congressional Budget Office has estimated that a six-week shutdown will reduce US economic growth in the fourth quarter by about 1.5 percentage points.
That would see growth halve from the third quarter.
While the reopening should boost first-quarter growth next year by 2.2 percentage points, it is forecast that about 11 billion US dollars (£8.4 billion) in US economic activity will be permanently lost.
BAE Systems – which makes weapons ranging across missiles and artillery systems, tanks, planes and warships – has a large presence in the US, which is its biggest market geographically and last year saw sales surge by 17 per cent to £12.5 billion.
On Wednesday, it said: “In the US, the president recently voiced support for the trilateral Aukus programme and momentum has continued to build around the architecture of the Golden Dome air and missile defence initiative, to which our technologies and capabilities are well aligned.”
Aukus is a multi-billion US dollar submarine deal between long-standing allies – Australia, the UK and the US.
BAE said it had secured more than £27 billion of orders so far in 2025, with the second half in line with its expectations.
It added that a recent announcement by Norway that it planned to buy Type 26 anti-submarine frigates was expected to lead to a “substantial order”, which would be booked after 2025.
BAE said it was on track with July’s increased full-year guidance, with the firm set to grow sales by between 8 per cent and 10 per cent and underlying earnings by between 9 per cent and 11 per cent.
Charles Woodburn, BAE Systems Chief Executive, said: "We continue to deliver strong financial and operational performance in the second half of the year, underpinning the full-year guidance we upgraded in July.
"The recent agreement with Türkiye for Typhoon aircraft and announcement by Norway in respect of Type 26 frigates demonstrate sustained global demand for our leading defence capabilities.
"These programmes not only strengthen national security, but also support thousands of skilled jobs and generate significant export value for the UK economy.”