Taxpayers will hand Rolls-Royce up to £1.25bn to develop new jet engines in Britain under Healey's Budget deal

Chancellor John Healey announced the £2.5bn framework deal in his Budget speech on Wednesday, with the government committing up to £1.25bn — rising from an initial £300m if Rolls-Royce wins a contract with Airbus or Boeing. The agreement rescues a deal that stalled under former PM Keir Starmer, when fears grew that Rolls could take the programme overseas. Chief executive Tufan Erginbilgic called it a 'once-in-a-generation opportunity' to transform Britain's advanced manufacturing supply chain.

Rolls-Royce has been locked out of the narrowbody engine market since selling its stake in the International Aero Engines consortium to Pratt & Whitney in 2012.

The deal is expected to create 3,300 high-value jobs across the Midlands, Bristol and the wider UK supply chain.

CFM International and Pratt & Whitney currently dominate the market for engines powering the Airbus A320 and Boeing 737 families — Rolls aims to challenge them using its UltraFan technology.