Rolls-Royce engines could be built abroad as UK crown jewels face pressure

Rolls-Royce could build a new range of jet engines abroad, a development that has raised fears Britain’s manufacturing crown jewels could be moved overseas if the government does not accelerate support. The Daily Mail reported that the Derby-based company is weighing production in Germany or the United States for a programme that would support about 40,000 jobs across Rolls-Royce and its supply chain as Berlin and Washington court the project.

Industry body ADS said the prospect underscores how competitive the global market remains and urged the government to boost support for aerospace research and to address high energy costs that squeeze manufacturers. An ADS spokesperson said the UK must remain an attractive place to do business and that decisions on where to source components over the next two years could shape the sector for decades. While current government measures are seen as helpful, ADS argued that action must be delivered at pace to protect the UK’s market position.

Rolls-Royce is seeking hundreds of millions of pounds in UK funding to cover roughly £3 billion of research and development costs for the programme, which aims to re-enter the narrow-body engine market used on shorter-haul flights. Boss Tufan Erginbilgic has signaled a preference to develop in Britain, though insiders say there are plenty of options outside the UK.

Without taxpayer support, the company could weigh up building the engines in Germany or the United States, two countries where it already operates and where energy costs are cheaper. Such a move would be a body blow to Britain and would echo other high-profile UK investment frictions, including AstraZeneca’s scrapping of a vaccine plant on Merseyside and the Channel Tunnel operator’s decision to curb future UK investment amid concerns over the tax regime.

Energy costs are an increasingly central concern for manufacturers, with critics arguing that policy debates around Net Zero have raised operating expenses in ways that erode competitiveness. Proponents say targeted government backing for aerospace research and measures to lower industrial energy bills could help retain and attract critical British engineering capacity.

Rolls-Royce’s plan to re-enter the narrow-body engine market—worth roughly £1.6 trillion globally when summed across the broader aviation sector—highlights the scale of potential opportunities for the UK economy. The company estimates the programme could generate substantial value for the UK, though the ultimate geographic location of engine production will depend on the mix of public support, private investment, and relative energy costs across jurisdictions. The decision will carry implications for Labour’s industrial strategy and for the broader narrative around how the UK protects its advanced manufacturing capabilities as global competition intensifies.