A £9bn nuclear submarine contract has been awarded to Rolls-Royce - hailed by the government as a win for the economy and the UK's nuclear deterrent.

The Ministry of Defence confirmed overnight that the UK company - not to be confused with the luxury motor car manufacturer - has won an eight-year contract to design, make and provide support services to nuclear reactors that power its fleet of submarines.

The deal will strengthen the Royal Navy's continuous at-sea deterrent, under which at least one nuclear-armed ballistic missile submarine patrols the seas at all times.

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The MOD added that the AUKUS defence pact, which also involves the United States and Australia, would also benefit.

Defence Secretary John Healey said the so-called Unity contract would save the country's coffers £400m over the eight-year term by combining multiple contracts into one.

The announcement was made as the government scrambles to push its growth agenda after the chancellor's budget last October was blasted by businesses as bad for the economy.

"It's a boost to British jobs, British business. It's a boost to our nuclear deterrent," Mr Healey told Sky News.

"It really shows the way that defence is part of the engine for economic growth in this country," he said on a visit to the Rolls-Royce plant in Derby.

The deal will also support work on the Dreadnought class of nuclear submarines, which are currently being built, and is expected to create 1,000 jobs and safeguard 4,000 others.

It comes at a time when the country's defence budget is in sharp focus amid continuing tensions with Russia over its war in Ukraine.

Earlier this week, Mr Healey revealed that a Royal Navy submarine had chased off a Russian spy ship from the UK coast by surfacing next to the vessel.

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There is also pressure from US President Donald Trump for NATO allies to bolster defence spending, on top of demands already made by the body's secretary general.

The wider defence industry is awaiting the publication of the government's Strategic Defence Review, which is set to be completed in the spring.

That is widely expected to result in more resources being allocated, under pressure from NATO, with defence spending set to rise to 2.5% of gross domestic product.

The new set of priorities is being drawn up amid widespread criticism that successive governments have damaged the capabilities of the UK's armed forces through years of cuts and underinvestment at a time of rising global threats.

(c) Sky News 2025: Rolls-Royce wins £9bn UK submarine contract in 'boost to jobs and nuclear deterrent'