UK military expenditure set to fall below NATO target of two per cent

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A new study by the Royal United Services Institute (RUSI) indicates that Britain's defence spending will for the first time fall below a NATO target of 2 per cent of GDP in 2015 – at the same time that the government is urging other European nations to meet the target.

The RUSI briefing shows that, on current spending plans and growth projections, the UK’s defence budget is set to fall to an estimated 1.88% of GDP in the financial year that begins in April 2015.

On existing Ministry of Defence (MoD) planning assumptions defence spending would fall further in relative terms to around 1.7 per cent of GDP by the 2020/21 financial year.  

However, the report warns that, given wider political support for spending cuts after 2015/16, even this could prove over-optimistic, and possible further cuts in the 2015 Spending Review of between 4 per cent and 10 per cent in real terms over five years could see defence spending falling to between 1.5 per cent and 1.6 per cent of GDP in 2020/21.  

To the government's embarrassment, the briefing was published by RUSI during the Wales NATO summit at the beginning of September, at which the UK gave strong support to calls for all members states to meet the Alliance's target of 2% of national GDP to be spent on defence.

The report's author, Professor Malcolm Chalmers, argues that the next Strategic Defence and Security Review should be held in parallel with the government's 2015 Spending Review to ensure that Ministers are fully aware of the military consequences of any proposed spending cuts.  MoD should complete as much as possible of the detailed work on the feasibility and cost-effectiveness of a range of possible policy options in advance of the May 2015 general election to avoid the risks of key decisions being made in a limited period of time without sufficient supporting information.

The report observes that political commitments to bring two new large aircraft carriers into service and build a successor generation of Trident nuclear missile submarines could result in economies in other areas of defence provision which “could pose significant risks to the international credibility of the rest of the UK armed forces”.

The risks would be increased if the Treasury requires MoD, along with other government departments, to ‘front load’ economies in the first two years of the next Spending Review.   This would force MoD to make cuts that could “severely reduce operational readiness and undermine military morale”.

The RUSI study does not address the impacts of spending on new military operations, raising the possibility that UK engagement in a new war in Iraq may add even more strain to defence budgets.

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