The International Institute for Strategic Studies claims that Britain spent 1.98 per cent on defence in 2017 — the same figure reported for the previous year.

However, according to NATO, the UK spent 2.14 per cent of GDP on defence.

IISS Director General John Chipman said:

“Only two European Nato states – Greece and Estonia – met the aim to spend 2 per cent of their GDP on defence, down from four European states. The UK dipped slightly below this at 1.98 per cent, as its economy grew faster than its defence spending.

Nonetheless, the UK remained the only European state in the world’s top five defence spenders. If all NATO European countries were to have met this 2 per cent of GDP target, their defence spending would have needed to rise by over 40 per cent.”

IISS is a a leading authority on global security, political risk and military conflict. The Military Balance 2018, the annual assessment of global military capabilities and defence economics from the IISS suggests that European states are ‘increasingly conscious that the world is a dangerous place.

Military capabilities on the continent have, however, become hollowed out as states first reaped a post-Cold War peace dividend and then made defence a discretionary activity in the wake of post-2008 austerity’ say IISS.

The report states:

“Our figures show that Europe’s growing defence investments are still not fully geared towards preparing European armed forces for future challenges. For most, defence R&D remains limited.

Indeed, in 2016 three global defence firms – BAE, Boeing and Lockheed Martin – each spent more on defence R&D than all but two European states. Only France and the UK outranked them. And allocations for other costs, like military pensions, remain high in some states.

In 2017 for instance, military pensions absorbed over 33% of the Belgian and Portuguese defence budgets.”

The report discusses moves to recover and rebuild capability have been given impetus by stronger US pressure on European states to do more for their own defence, but claims they will take time to bear fruit.

George Allison
George Allison
George has a degree in Cyber Security from Glasgow Caledonian University and has a keen interest in naval and cyber security matters and has appeared on national radio and television to discuss current events. George is on Twitter at @geoallison
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26 COMMENTS

  1. I’ve always been a little dubious of the 2% claim by the British government, as i do believe that Military missions regards humanitarian (Caribbean/South Atlantic (As per today’s posts) and the UK Military Assistance to Ukraine is paid out of the military budget and not out the foreign Aid one.

  2. Strip out the pensions & the money that gets redirected to foreign aid and the number drops further still.

    The main thing is, that the Tory lie about “2%” is a myth and should be resisted.

    • *applause*

      2% a meaningless number anyway which has become an unintended thing in itself. It bears no relationship to capability, need, risk, planning, supply chains, gaps yada yada yada

      Originally designed to shame the shameful we have wrapped ourselves in it like a comfort blanket which will shield us from all the troubles in the world and its dangerous AF.

  3. they seem to forget that we as a nation do not spend 2% on defence at all,as the overall budget is 2% but out of that 2% we pay war pensions to ex service personnel compensation for injuries along with these allegation claims of mistreatment by British troops to Iraq civilians and our nuclear deterrent which never used to be part of the defence budget until the idiot,s Cameron and Osbourne came along so i would reckon we spend maybe 1.2%,but they always like to fabricate the truth…plus with further cuts on the way lord only knows what the true figure really is…

  4. We really need to be clear on what we spend money on (not just defence).

    From my perspective there are really only 3 pools of money required.

    People (who will do it) , Facilities & Equipment (where and what they will do it with) and Operations (the day to day costs of doing things).

    Put simply

    Personnel and Welfare
    Capital Expenditure
    Operational Expenditure

    As a rule of thumb I would say 40% to personnel, 30% to equipment and 30% to operations

    This would broadly come out as £16bn, £12bn and £12bn, which actually should be more than enough to provide a 250k strong force and equip it to a high standard.

    So I dont believe the Government is spending anywhere near this amount at all. It just does not add up.

      • makes you wonder why the USA has the hump with most countries on spending,and if our idiots in power don,t stop cutbacks soon we will also be in the sights of the USA they have already warned us against cuts and further cuts,where will it all end….i remember when Bosnia kicked of we short manned then due to the collapse of the wall and options for change they got rid of to much manpower and equipment way to quick,then when Bosnia turned up we did not have enough resources i was attached to 2 battalions who had staff shortages then when my own battalion went we had to get manpower from other battalions…now we have even less,what i would like to see is true facts and figures on where every single penny of our defence budget goes apart from in the back pockets of greedy idiots…or is it a case of hide the numbers like they do with the money we give to the EU and foreign aid because no one truly knows the actual figure or dare not tell us

  5. All things said and done it takes an awful amount of effort to spend £40bn pa.and have so little to show for it.

    I have costed a joint UK force out in some detail and believe me we can do so much better if we were consistent in our orders (4 ships, 1000 vehicles, 30 Aircraft and 500,000 uniforms etc….) it really isn’t rocket science.

    £12bn pa on equipment will allow for a great navy, much larger airforce and well equipped land force, but will need careful management – something we don’t seem too able to do. It has to be spent every year (drumbeat) and to a volume (lets say 16 fighters pa. – then choose F35/Typhoon or a combo)…

    It really does come down to common sense and long term planning – for me the budget is adequate, I would like more (3% would add real value to the UK economy) but ultimately it needs to be managed far better than it currently is.

  6. The vast UK defence budget is there to give huge contracts to the military industrial complex which provides small amounts of kit at eye watering prices.

    It gives the UK many capabilities others lack, which is important, but they really need to get more balance in quality and quantity, which will mean cheaper kit in greater numbers and a two tier navy.

    And the problem of sheer incompetence throughout Mod and the military when it comes to managing money, government delays, cuts, and the cost of Successor placed in core budget leaves the MoD in the position it is in.

    HMG deliberately ambiguous concerning defence with the public, bordering on downright lies.

    • Daniele I agree with much of what you say, but dont think we do need 2 tiers for any of the forces.

      A FREMM frigate is circa £600-800m and for me is better than a T45 as it has offensive capabilities. I would also be happy with a Huitfeldt or Absalon that would all come in cheaper and better equipped – we’ve also spent a small fortune on FRES when actually an updated Warrior would seem to have been the solution (as would an updated T23 as I think the hull is acoustically very good even now).

      And yet when we do have something good like Merlin or Apache, we dont buy enough of them.

      Its interesting to me that our Apache force is shot due to over use and our response is to buy less than we had (at an amazing price it has to be said), whilst we wouldn’t commit our tanks to Afghanistan (unlike some of our partners).

      If we are not going to use assets when requested by commanders in the field (like tanks in Herrick) then we should replace them with assets we are over using (like Apache).

      I also think we need to have smaller companies supplying the armed forces – surely an order for 50 IFV’s every year would keep a small factory going and keep the knowledge in the UK.

  7. This just can’t be true with our rising defence budget and £178 billion equipment plans. Surely our Government wouldn’t be telling us a load of old BS would they?
    Then the total indignation and anger – “of course the civil service are impartial”, when many do not believe their computer models suggest BREXIT will reduce growth. They just think ordinary people are stupid. All very sad and predictable.

  8. Very roughly, for illustration only with wild guesses, if the UK with its £40 bn budget spent all that outside the UK on kit and built none, then that would be half the budget with no return apart from the assets themselves. No design in the UK, no management, no research and development for those assets. So only £20 bn spent in the UK on wages, bases, infrastructure etc. At an economic mulitplier of 0.6, that £20 bn returns £12 bn to the economy, so nett cost of that £40 bn spend is £28 bn.

    But the UK does design and build kit, and for the likes of the F35 gets 15% worth of worldwide benefit, plus some for the Typhoon. So for nice round figures it gets one way or another £40 bn worth of economic benefit at 0.6 = £24 bn, so the nett cost of that £40 bn is £16 bn, not £28 bn. That means that rather than spending 2% of GDP on defence, the nett figure is just 0.8%. This doesn’t take into account any other exports, and those exports wouldn’t happen if the UK made nothing.

    Imagine if the defence secretary could get the full accounting of that economic benefit from the Treasury, albeit a year behind, and insist on getting that £24 bn back as extra defence budget (it would also be iterative the next year and the next …).

    Now, the US spends 3.58% of GDP on defence, but does it really? Just about all is spent in the US itself as it buys little from outside. So the real cost minus the 0.6 (that’s 60%) economic benefit is 1.44% of GDP. And the USA exports squillions, so the real cost to the US of the defence industry is probably acutally a minus figure in terms of GDP. It makes money for every dollar it spends.

    THAT’S the problem with comparing defence spending of NATO members – lack of real accounting.

  9. 2 words
    Creative accounting
    All courtesy of George Osbourne. He should never have been allowed to lump strategic nuclear deterrent and armed forces pensions into core defence budget. He has created an utter mess as the armed forces budget cannot deliver renewed deterrence and a decent conventional military force. The budget was not uplifted enough to do this and would have to be somewhere around £45-50 billion to suffice or 3% GDP to defence ratio.

  10. Morning all
    1.98% or 2.1% all doesn’t really matter as it talks about the % of GDP that can get measured in many dofferent ways to satisfy politicians and economists and not the departments that actually get given a DEL (Departmental Expenditure Limit).
    The MoD struggles most years to spend the money it is allocated and is allowed, unlike other departments, to hold on to that money over the financial year boundary.
    When MoD goes to Treasury and asks for even more money it is very difficult for Treasury to give more when the MoD cannot spend the money it is allocated in year. Take RDEL (resource – cost of running things including people). If the manpower limits set cannot be achieved then that money cannot be spent, the department cannot adaquately resource itself from a personnel point of view so why should it be given extra money to buys toys that by MoD’s own admission cannot man (frigates and destroyers along side, ranks that haven’t been used since TELIC etc).
    One of the other commentators is right – it’s a mess. You need someone with strong leadership and vision to sort it. Any ideas?

    • Lee , well said

      The Mod needs a clear 25 year strategy that can then deliver a defence industrial strategy and procurement plan. It also needs the ability to move funding across the whole plan or to be able to smooth costs out with suppliers.

      One of the key problems as I see it – is the lack of trust between industry and defence whereby defence cuts volumes and industry inflates prices. Fixed price/fixed volume contracts are the way to go with perhaps the risk of weapons integration being mitigated by a stanflex style approach – whereby the connectivity is built in – but the platform is added by defence itself or another supplier. Just a thought…

    • The solution for the personnel expenses would be to allow more leeway in attaining the recruitment quota. By say using a variant of the US and Japanese systems. In them say the DOD know they won’t make quota. The recruiting commands are allowed to give greater incentive bonuses for signing on or re-enlisting. Furthermore the Services can come up with the incentives size, eligibility, and requirements. Without having to wait on a Congressional bill to raise the pay. Due to the money having already being allocated. This allows them to be much more flexible in the goal of achieving recruitment targets. In addition to saving the department from having return money while at the same time as asking for more.
      Second for the love of God hire a better publicist for the recruitment ads. I saw a few of the British Army’s and Royal Navy’s recruitment ads and they more inspired a desire to blow my brains out to make it stop, than to make me to take either institution as a prospect for a young man. Compare them to say US ads, or Russian, Chinese or even Polish.

  11. The 2% was supposed to be a minimum acceptable defence spend, not a target or achievement in itself as HMG makes out. Our “2%” is achieved by very dubious accounting which amounts to deliberately decieving the electorate. One day we’ll be caught out, under funded, under manned, under equipped & ill prepared for the next major conflict & many will be killed or maimed unnecesarily.

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