By Jonathan Davies

The government is set to sign a deal worth £3.5bn for nearly 600 armoured vehicles to be built by US defence firm General Dynamics in Caerphilly, South Wales.

The Ministry of Defence (MoD) will sign the deal with General Dynamics ahead of the NATO Summit which takes place in Newport tomorrow (Thursday) and Friday.

The firm will build 589 Scout Specialist Vehicles (Scout SV) which construction set to begin in 2017, with the first brigade ready for deployment in 2020.

Prime Minister David Cameron said to £3.5bn will be the single largest order for armoured vehicles for more than 30 years.

The Prime Minister said: "These new vehicles are testament to the world-class engineering skills in south Wales and across the UK, helping to create the Army's first fully digitalised armoured vehicles.

"Not only will they be crucial in helping to keep Britain safe, they will also underpin nearly 1,300 jobs across the UK and showcase the strength of the UK's highly skilled defence sector."

It comes ahead of the start of the NATO Summit which is expected to see calls for the 28 member states to increase spend on defence.

In a speech later at the Royal United Services Institute, a defence think tank, Defence Secretary Michael Fallon is expected to make the call.

He is expected to say: "Not only is there a real risk of equipment obsolescence amongst Nato's European allies, but investment underpins our vital transatlantic bond.

"Nato was formed on the basis that Europe would pay her way.

"Like any insurance policy, defence only pays out when you pay in.

"US taxpayers won't go on picking up the cheque if we choose to prioritise social welfare spending when the threats are on our doorstep."

Kevin Connell, vice president of General Dynamics UK, who runs the Scout SV programme, said: "We have a really talented workforce of more than 200 and we expect down the line when we start production for that to grow even further."

He said they were completing the final critical design reviews over next few months and hoped to start production in 2017, running right through to 2024.

"If the MoD exercises that production option, we're looking at 10 years solid work here and probably beyond that when you consider other variants and export opportunities."

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