Rachel Reeves' defence spending boost simply isn't enough to deter an imminent war

27 March 2025, 23:40 | Updated: 28 March 2025, 00:28

Chancellor Rachel Reeves’ 2.5% rise in defence spending by 2027 is nowhere near the emergency spending needed to deter an imminent war.

Spending on defence in the UK has been below 3% since 1995, and the effect of years of underspending are cumulative. To put this into perspective, in 1939 the US was spending only 1.8% of its GDP on defence, which rose to 42.7% by 1943. That is what wartime spending would be like.

Instead of acknowledging that her decisions require trade-offs, Chancellor Reeves presented increased defence spending as a cost-free opportunity to create more jobs in neglected areas.

The justification for building new submarines in Barrow-in-Furness is not to provide their shipyard with more orders, but as insurance to counter the growing threats from Russia at a time when the US is quickly withdrawing its protection.

Britain being an island may become less an asset and more a liability. Trade of physical goods has historically been vulnerable to naval blockade, but now trade in services is vulnerable as well given its reliance on communication via highly vulnerable undersea cables. The UK is also reliant on underwater infrastructure like fibre optic cables, natural gas pipes and electric interconnectors at the bottom of the North Sea.

Britain needs more submarines, frigates and undersea drones immediately to protect itself not only in the event of all out conflict, but from the type of hybrid warfare in which the Russians excel.

It also needs more troops and tanks to deter aggression against its Baltic allies unless it is willing to see them return to Russian rule.

Gradual increases in defence spending are all well and good as long as the US can be relied upon to bear most of Europe’s defence burden. One need not like the Trump administration’s crude and transactional attitude towards its old allies, but American frustration with European behaviour is neither new nor unwarranted.

European leaders loved to make invidious comparisons between their civilised continent with its lavish welfare spending and the barbaric and cruel US, while relying on America to pay for its defence. Nine years ago, President Barack Obama called them ‘free riders’.

The US is turning its attention to the growing threat from China and is prepared to leave Europe, including the UK, to fend for itself. I expect that by the autumn budget announcement that new reality will be finally absorbed.

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Professor Michael Ben-Gad is a Professor of Economics at City St George’s, University of London

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