Taxpayers will put up to £1.25bn into Rolls-Royce's £2.5bn programme to develop jet engines in Britain, Chancellor John Healey announces

Finance Minister John Healey announced the deal in his Budget speech on Wednesday, with the government committing more than £300m to research initially — rising to as much as half of £2.5bn total if Rolls-Royce wins a contract with Airbus or Boeing. The programme aims to bring Rolls-Royce back into the narrowbody jet market it abandoned when it sold its stake in International Aero Engines to Pratt & Whitney in 2012. Rolls chief executive Tufan Erginbilgic called it a "once-in-a-generation opportunity" to build high-value jobs across the Midlands, Bristol and beyond.

The 10-year programme targets narrowbody aircraft engines — powering short-haul jets like the Airbus A320 and Boeing 737 — a market now dominated by CFM International and Pratt & Whitney.

Securing a position on next-generation narrowbody jets could add £120bn to the UK economy over the programme's lifetime, the government says.

Talks had stalled under former Prime Minister Keir Starmer, sparking fears Rolls-Royce could develop the engines overseas instead.