Buy the UK DIP? Defense stocks lifted by $20 billion spending boost as gilts come under fire

A man makes final checks prior to the unveiling of a model of a new fighter jet, a part of Team Tempest. TOLGA AKMEN | AFP | Getty Images British defense stocks are marching higher once again after the U.K. confirmed a near-$20 billion military spending boost on Tuesday — but the country's fiscal woes could ultimately slam the brakes on investment, analysts say. Outgoing Prime Minister Keir Starmer this week announced an extra £15 billion ($19.9 billion) in defense spending over the next four years as part of the U.K.'s Defence Investment Plan (DIP), which will lift annual spending to £79.1 billion by 2029, or 2.7%% of GDP. The DIP is intended to bolster the U.K.'s military capability, its nuclear deterrent and industrial capacity, while making way for greater technical investment in areas like cybersecurity, drones and AI. The latest boost to DIP spending has lifted the FTSE 350 Aerospace & Defense index by almost 5% since the Tuesday open in London, with the likes of Babcock , BAE Systems and Chemring performing well. It marked a welcome boost for the sector, which had recently seen a multi-year rally run out of steam amid concerns of faltering European defense spending plans. BAE Systems CEO Charles Woodburn welcomed the announcement, which he said "provides much-needed clarity for industry and a clear strategic direction for our armed forces." Stock Chart Icon Stock chart icon U.K. …