Shares in BAE Systems were down on the FTSE 100 in afternoon trading after the defence giant said that it would be cutting 946 jobs ahead of government cuts resulting from the upcoming defence spending review.

Unite the union says that 740 jobs will be lost at its Military Air Solutions business and another 206 jobs will be cut at its Systems Integrated Technologies Division.

The cuts are expected to fall at BAE's operations in Brough, Chadderton, Farnborough, Samlesbury and Warton.

Hugh Scullion, General Secretary of the Confederation of Shipbuilding and Engineering Unions, said, "The unions are shocked at the scale of these losses and will be demanding an explanation from BAE. Talks will begin locally in the first instance to attempt to mitigate the planned losses and if necessary national negotiations will follow. The unions will oppose any compulsory redundancies.

"With the forthcoming defence review these cuts may be the tip of the iceberg but knee jerk reactions from employers could make things even worse. Cuts are being demanded before the shape of the defence industry has been decided. The defence industry will suffer more than necessary, if employers make poor judgement calls.

"The defence industry is vital to the UK economy. The technical expertise built up in the UK is transferable to other areas of manufacturing. The government is risking destroying the UK's manufacturing base with ideologically driven cuts."

By 16:10 shares in BAE Systems were down 1.33 per cent on the FTSE 100 to 319.00 pence per share.