Tuesday, October 09, 2007

Defence spending

Did you hear Alistair Darling announce that he would be increasing defence spending to look after the armed forces working so hard and risking so much on our behalf?

It's true in nominal terms, it's true in real terms, it doesn't appear to be true in terms of a percentage of GDP. With a huge commitment in Afghanistan and new global threats the share of our GDP we spend on the armed forces is still in decline.

The relevant numbers can be seen in Table 1.3 and Table B3:

2007-08: £32.6 billion / £1,404 billion = 2.32%
2010-11: £36.9 billion / £1,630 billion = 2.26%

In strategic terms we are still trying to increase the size of the Cold War dividend. Unless we expect big efficiency savings this isn't sensible behaviour for a nation with big foreign commitments and underequipped armed forces.


Elliott said...

It's only true in real terms over the longer term. If you add up all the numbers in table B13 for defence (current and capital budgets plus "unallocated special reserve") you get sub-inflationary increases for two years followed by healthy spikes in the two years after that (figs here).

Otherwise I agree with everything you say.

Dave Cole said...

The use of a relative measure - GDP - is weak here. The economy might be growing faster than defence spending, after all.

MoD are trying to make efficiency savings - 5% across the board with 25% at head office - but, even with the sale of Chelsea Barracks to improve accommodation for troops, the defence budget is under a lot of strain - the recent purchase of 140 Mastiffs, CV(F), Typhoon and the UORs that keep being issued - and I think that large programmes, like FRES, are going to be delayed until at least the next CSR and possibly cancelled.