US Budget blows a cloud over JSF

Uncertainties about the future of the Joint Strike Fighter project intensified this week, as experts warned that a final decision on whether it is to go ahead might not be made until 2002.

There had been speculation that JSF would get the go-ahead this week, following the publication of the US government’s long-awaited defence spending review.

But Jim Setig, spokesman for Lockheed Martin, one of the manufacturers bidding for the contract, said the rumours were untrue. The Pentagon has hinted the review may never be published, he said. ‘The defence spending review is not important, what matters is the Budget.’

Unless the US government calls a supplementary Budget later this year, a final decision may not be announced until 2002, Setig added.

Although President Bush’s first budget, now in the last stages of the legislative process, sets aside more than $300bn for defence spending next year, it also makes the largest tax cuts for 20 years.

Some analysts warn that the JSF project, worth $500bn, could be cancelled in the face of an over-stretched US defence programme. There have also been predictions the JSF technology would be dismissed by Pentagon officials in favour of ‘drones’, the pilotless jets that are thought to be the future of combat aircraft.

Tony Lancelot, an analyst at Old Mutual, said the JSF is a complicated, long-term project. ‘It’s all still up in the air. But it would be politically embarrassing for the US government to turn around at this stage and say it doesn’t want the JSF, it wants an unmanned aircraft instead.’

The UK government has been working with the US on the programme and is planning to order 150 of the aircraft. Defence secretary Geoff Hoon is believed to have urged the US government not to drop the project, as the aircraft is planned for the MoD’s Future Aircraft Carrier.

The project could secure 5,000 UK jobs. BAE Systems could be the biggest beneficiary of the programme, which could potentially add £2bn to its order book. BAE is a partner in the Lockheed Martin consortium. It is also a subcontractor to the rival Boeing bid.

BAE’s shares fell recently, amid fears it could be hit by cuts in US defence spending as a result of the review. But Professor Keith Hayward, head of economic and political affairs at the Society of British Aerospace Manufacturers, said the defence sector is looking buoyant. ‘The US is going to increase its defence spending, and the UK has got pretty solid commitments. In the medium to long term, things look stable.’

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