The defence industry welcomed a surprise real-terms rise in defence spending in the review, which came after weeks of stories suggesting spending would be frozen or even cut.
Chancellor Gordon Brown said the first increase in defence spending since the end of the Cold War would provide funds needed to implement the 1998 Strategic Defence Review.
Swan Hunter commercial director Norman Brownell said the extra spending had come `not a moment too soon’, and hoped more money would be going to correct naval shortages.
The new injection of cash will see defence spending rise from about £23bn this year to almost £25bn in 2004.
Defence Secretary Geoff Hoon said: `The increase in spending recognises that while the armed forces have risen to every challenge, doing so has exposed strains and deficiencies.’
He added that the MoD would continue to dispose of assets and property it did not need. An additional £200m will be given to the armed forces this year to deal with immediate budget problems following the Kosovo conflict.
A pooled budget will be set up between the MoD, the Foreign Office and the Department for International Development to set up operations to prevent conflict.
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