A Welcome Refreshment? Implications of the Spring Budget for UK Defence
Malcolm Chalmers
17 May 2023Long Read
This policy brief contributes to an understanding of the government's decisions on the UK’s defence budget announced in the Integrated Review Refresh and the Spring Budget in March 2023.
- UK defence spending is set to increase from 2.06% of GDP in 2019–20 to 2.27% of GDP by 2024–25 (or 2.35% of GDP if annual spending on Ukraine continues at its current level).
- The core defence budget is set to rise at an average rate of 2.2% per annum in real terms over this period.
- This growth is especially noteworthy given that real-terms GDP is projected to barely increase at all over the same period.
- Between 2019–20 and 2024–25, core capital spending is due to increase by some 62% in real terms. In contrast, real-terms day-today core resource spending is due to fall by some 4%. Despite below-inflation pay settlements for the Ministry of Defence workforce (both military and civilian), downward pressures on personnel numbers are therefore likely to continue.
- Of the £11 billion in extra defence spending over the next five years announced in the Spring Budget, some £9 billion has been allocated to the nuclear programme (including nuclear-powered attack submarines). The nuclear share of the 10-year equipment budget is set to rise from 25% to 34%.
- The announced increases should ensure that the UK’s defence budget remains, both in absolute terms and as a percentage of GDP, higher than that of France, at least until the next French presidential election in 2027.
- The next major Defence Review – likely after the general election – will come at an important point for the two largest conventional programmes of the next decade – the AUKUS submarine and the Global Combat Air Programme. While both could offer opportunities for cost sharing, significant risks remain.
- In the Integrated Review Refresh, the government set out a ‘new aspiration’ to increase defence spending to 2.5% of GDP ‘as the fiscal and economic circumstances allow’. If the post-election Spending Review decides to do so within five years, this would require an extra £42 billion. Such an increase could only be afforded through a proportionate increase in the national tax burden.
WRITTEN BY
Malcolm Chalmers
Deputy Director General
Senior Management
