UK Defence Budget: Still a balancing act

by Freya Lewis Lewis Sep 14, 2021, 10:20 AM

On the opening day of DSEI 2021, taking place at London’s ExCeL centre, Ana Popescu, lead analyst for European budgets at Janes explores the current status of the Europe’s largest defence spender….

On the opening day of DSEI 2021, taking place at London’s ExCeL centre, Ana Popescu, lead analyst for European budgets at Janes explores the current status of Europe’s largest defence spender….

The UK is Europe’s largest defence market, with the country’s defence industrial base featuring world-class capabilities across most domains. It continues to be a major force in global export markets, with UK government figures indicating that orders of GBP80 billion were achieved between 2011 and 2019.  Its defence and security strategy is underpinned by a government commitment to maintain defence spending at 2% of GDP or higher.  

Out with the old, in with the new: UK government expresses support for defence but cuts still on the horizon for older capabilities 

After the 2008 crisis, the UK defence budget was cut in real terms for five consecutive years. As a result, Janes interconnected industry intelligence highlights that the UK’s defence budget fell from 2.5% of GDP in 2010 to 2% by 2015. Increases following that were relatively small, 2-4% in nominal terms. This means the real value in 2020, when accounting for inflation, was less than 0.5% higher than the 2016 one. Moreover, the Ministry of Defence’s annual Equipment Plan which is the Department’s forecast budget to cover the costs of procurement and support of military equipment for the next decade had been running with a deficit for years. The UK MoD entered 2020 with a shortfall between GBP2.9 and GBP13 billion over 2019-2029, according to its own estimates. 

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