Eastern protests cause share woe

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BAE shares tumbled around five per cent last week as the crisis in the Middle East spread to Libya and the Government announced plans to reign in spending on defence.

But a leading broker backed the firm - one of the Fylde coast’s biggest employers - in the long term.

As pro-democracy protests spread from Tunisia and Egypt to Bahrain and Libya, investors started to show their nerves at the prospect of any possible uprising in Saudi Arabia.

Protests have been scheduled in the country in March, and yesterday trouble flared in Oman.

The country accounted for 12 per cent of BAE’s sales in 2009, and does most of its business with BAE’s jet fleet support.

Closer to home, the Governments spending review saw Defence Secretary Dr Liam Fox announce a crackdown on spending after finding a huge black hole in the Ministry of Defence’s accounts.

Dr Fox said the coalition government had identified a £38bn black hole in the Ministry of Defence accounts.

The overspend has been attributed to projects being given the go-ahead with little thought on the resulting running costs, and project costs rocketing

The minister said the costs must be cut and that firms going over budget could be named and shamed.

He added: “There must be a real sense of urgency about achieving this goal, Where projects are falling behind schedule or budget we must take immediate remedial measures. Those responsible will be brought to account in front of the project board.”

Broker Citigroup gave BAE its backing and played down the current economic woes. A spokesman for the firm said: “It’s worth remembering the UK represents just 20 per cent of sales.

Regarding Saudi Arabia, he added: “This is not a fly-by-night operation, nor one that is heavily predicated on speculative sales.”

A spokesman for BAE said the company would not comment on share price fluctuations.