[LONDON] BAE Systems will axe 1,775 shipbuilding jobs and shut a historic yard in Britain as a government austerity drive hits demand, the British maker of military equipment said.

The yard in Portsmouth will be closed in the second half of 2014, but an engineering team will be retained to support new Type 26 warships, which will be built in Glasgow, BAE said on Wednesday.

The undisclosed cost of restructuring BAE's shipbuilding business will be borne by the Ministry of Defence (MOD), the company added. At the same time, the government is imposing deep cuts to defence budgets as part of a round of sweeping public spending reductions aimed at slashing the UK's deficit.