COVID-19’s economic damage is a problem for British security

The UK is among one of the most economically damaged nations from COVID-19 coronavirus and it will significantly impact on the country’s security in 2020 and beyond, as it deals with increasing cyber threats, challenges from adverse states like Russia and Iran, as well as protecting its interests in the Middle-East and Africa. 

This article was submitted to the UK Defence Journal by Harry Basnett, a graduate of International Politics and Strategic Studies BA (Hons) from Aberystwyth University. As with any opinion piece, the views expressed here are not necessarily the opinion of the UK Defence Journal. Our aim is to promote discussion in defence and we do this by presenting views from as a wide range of people as possible.

At the time of writing 261,184 Britons have been infected by coronavirus and 36,914 have succumbed to its symptoms.

In response to the spread of the disease the UK government announced a lockdown, in all but name, on the 23rd of March – closing non-essential businesses, schools and public areas, making unnecessary journeys a criminal offence and imposing social-distancing rules. This was extended on April 16th by a further three weeks, but will likely last longer on certain aspects of society. 

These measures are projected to have serious impacts for the UK’s economy. The OBR has forecast public sector borrowing to increase by £218 Billion in 2020, a surge of 79% on previously expected figures. In addition to a 35% drop in GDP in the second quarter of this year, and 12.8% overall, followed by a climb of 17.9% in 2021 (as viewable in Figure 1). 

This is the largest ever collapse in British GDP from the previous year – around 15%. The previous occurred during the Spanish Flu, which saw a fall of 12% (as shown in Figure 2).

There is no doubt that the outlook for the UK economy in 2020 /21 is bleak. And raises the questions, how will the government respond? And how will this impact on defence expenditure? 

It is likely that the government will respond by restricting the spending of government departments, including the MOD, as was done following the 2007/8 financial crash, where defence expenditure shrunk from 2.5% of GDP in 2009, to 2.1% in 2015.7 

GlobalData Intelligence have produced two projections for how MOD’s budget could be impacted in response to COVID-19’s effect on the economy. One, showing a scenario in which the status-quo was maintained (where-by no gross or actual increase in expenditure is observed) and another showing the effect of austerity on the budget. The first would see the budget initially slow-down in 2020, but grow afterwards – to $53.8 Billion in 2024. The second projects a continued decline in expenditure from 2020 until 2024, where it will represent 1.7% of GDP, at $49 Billion. These scenarios both predict a shortfall on the pre-COVID-19 projections, which told of a steady increase in defence expenditure from $51.2 Billion in 2020 to $59.4 Billion in 2024, a relative increase of 16% (these three models are shown in Figure 3).

By both of these scenarios, the effect of COVID-19 on the UK’s economy will significantly impact on the defence budget. It will either temporarily reduce relative expenditure and later the growth which could have been expected or force a much more significant decline, noted to be as much as $10.4 Billion – a 17%, shortfall on the pre-coronavirus expectation. 

Such eventualities raised the question: how will a reduce defence budget, caused by COVID19, impact on British security and defence in 2020 and the following years? 

To begin, it’s likely to increase difficulties for the UK in areas of cyber-intelligence – an already heavily underfunded, concentrated and prioritised aspect of security, which has been battling for a position of importance against conventional tools of warfare (Army, Navy, and Air Force) in recent years.

The global cyber situation is becoming increasingly hostile, with states and non-state actors seeking to infiltrate UK security. Russia, China, Iran and North Korea have been tipped as the largest operators in this area, along with less proficient groups and individuals. In 2019 alone the NCSC stopped 600 cyber operations against the country, had they been successful the attacks would have caused significant damage to our “social fabric … way of life and … economic prosperity”. 

As time continues and the capabilities of its adversaries develop, especially during these uncertain times, the risk of an operation which would harm or destroy key infrastructure, infiltrate Britain’s democracy or undermine its social and financial harmony is ever more present. 

A reduction in defence expenditure (or wider government financing in departments which deal with cyber security) will only make preventing these operations and their effects more difficult. With lower expenditure being distributed and re-prioritised, perhaps to more conventional areas of security, cyber defence risks being side-lined and underfunded. Such a scenario would only serve to decrease the ability of the NCSC and other organisations to counter these operations, while too increasing the possibility that one of them could seriously impact on the nation’s defence. 

A lower defence budget is also likely to raise questions over the necessity and capability of the UK to possess certain military provisions. In particular, whether it can afford to maintain/renew the trident nuclear deterrent, in addition to both, or any, of the Queen Elizabeth class aircraft carriers.

Questions were already being raised about the affordability and necessity for both projects based on the pre-coronavirus budgets, but these opinions will only become more legitimate as the UK see’s its defence expenditure shrink. In which case how would Britain be able afford to maintain these provisions?

It would surely be forced to decommission one, if not both carriers? Or even delay the renewal of Trident? 

Either of these scenarios would expose the UK to yet further risk from adverse states such as Russia, who has aimed in recent years to impinge on its sovereignty, by flying threateningly close to its AIRspace and passing close by its waters. Indeed, when discussing Moscow’s challenge to the UK, it only becomes more heightened during times of crisis, like those we are currently experiencing, and will experience with the predicted economic crisis to follow. This has been shown recently through the shadowing of seven Russian warships by the Royal Navy in waters near the British Isles, during the height of the COVID-19 pandemic.

Decommissioning the carriers would also remove the UK’s ability to launch aerial operations from anywhere in the globe. It would instead have to rely on domestic and overseas RAF bases (which could too be victim to shrinking expenditure) or use those of its allies. It has been forced to so in recent operations in Syria and Iraq, during Operation Shader – placing strain on the effectiveness of Britain to undertake its operations.

Therefore, by removing this capability, Britain would see significant effects in its operational ability and the availability to readily defend itself from adversaries. 

Finally, the reduced budget would call into question the participation of the UK in military and training operations across Europe, the Middle-East and Africa. Britain is currently involved in many deployments, by command of the Government, or through NATO and the UN; in particular, the armed forces are undertaking operations in the Baltic States and Ukraine to counter Russian aggression, in Syria, Iraq and Afghanistan to deter terrorist organisations and in South Sudan to maintain peace and stability in the region. 

However, with a reduced budget would come a necessary reassessment of operations, in which some overseas deployments could be called into question. Notes be may be taken on the need of the UK to still have an active presence in Iraq and Syria, when ISIS and other terrorist groups have subsided? Or, whether the UK can afford to operate in UN missions in South Sudan and other unstable nations? 

By withdrawing from these military deployments, not only will the UK signal its reduced position on the global stage, but it could see the emergence/resurgence of threats which are contrary to its interests. This might include a rebirth of terrorist groups and their ideologies and/or intensified posturing from aggressive states, while peace and stability in some regions could be lost. These are threats which could have significant impacts on British security in the short term and later, when the effects of these scenarios becomes apparent. 

Thus, COVID-19’s economic impact on the UK’s defence budget is likely to present very serious challenges for the country’s security. Britain would be forced to grapple with the increasing global hostility it finds itself in, all with much lower expenditure, in gross and actual terms. It will force a re- assessment of priorities, doing so is likely to create shortfalls in cyber security, conventional weapons and overseas operations. All of which will have an adverse effect on the UK’s ability to defend itself from threats and could lead to significant damage to the country’s economic, political and social security. 

With this reality, the armed forces, MOD and wider-Government should be preparing to deal with the increasing challenges that will face the country from a reduced defence budget. In particular, it should make urgent preparations for a potential and significant cyber operation to be carried out against the nation, for the decommissioning of both aircraft carriers (or the delay of Trident’s renewal) and for how oversees missions could be scaled down; with necessary attention given to how Britain will deal with the security challenges that these scenarios present.