After the long, indulgent years of the post-Cold War ‘peace dividend’ and more recent hand-wringing anxiety about scarce resources, governments across Europe are beginning to raise the level of public spending on defence, and promising to go further. Rearmament is suddenly the cause on everyone’s lips, our complacency shattered by Russian aggression and wider geopolitical insecurity around the world.
In this country, Prime Minister Keir Starmer announced in February that defence spending would rise to 2.5% of GDP from 2027, and that it was his ‘ambition’ to increase it further to 3% in the next parliament. The incoming Chancellor of Germany, Friedrich Merz, persuaded the Bundestag to amend the Basic Law, the Federal Republic’s constitution, to allow his government to borrow hundreds of billions of Euros to re-equip the Bundeswehr (Germany’s Armed Forces). The European Commission has established a new financial instrument, Security Action for Europe, which will fund up to €150 billion in loans to EU member states for defence procurement.
Some of Britain’s Nato allies have gone even further. Poland’s defence spending will reach 4.7% of GDP this year, a sensible precaution as it shares a border with the Russian exclave of Kaliningrad Oblast and a much longer one with Belarus, a staunch ally of Vladimir Putin. Meanwhile Mark Rutte, Nato’s secretary general, told the alliance’s Parliamentary Assembly in Dayton, Ohio, this weekend that he expects the Nato summit in the Hague at the end of June to ‘agree on a high defence spend target of in total 5%’. In practice, this may mean a commitment to allocate 3.5% to core defence responsibilities, with another 1.5% spent on related areas like cyber security and infrastructure.
This is all positive and indicates that Europe is genuinely coming to terms with the need to spend more of its own money on its security rather than rely on the ultimate guarantee of American assets and intervention. Nevertheless, I am becoming increasingly anxious that casual observers, a category into which at best most of the electorate perfectly reasonably falls, hear these numbers bandied about, and perceive a clear upward trajectory and are reassured that we are on track.
Starmer is in a difficult position. Facing challenging economic circumstances and a straitened financial position – no small part of it the making of him and his government – he has a difficult task to persuade the Labour Party that the armed forces are the overarching priority for increased public expenditure. This comes at a time when the Government is attempting, or at least talking about, radical reform of the National Health Service and finding savings in the vast and growing welfare bill.
Every little helps, so his commitment to raise defence spending should not be scorned. But we do need to keep it in perspective: the Ministry of Defence’s (MoD) budget will rise by 0.2% of GDP from 2027, which the prime minister claims will represent an additional £13.4bn a year. (The increase has been funded by a stinging raid on the international aid budget, which itself is connected to our wider security and foreign policy.)
That is a substantial amount of money, and it is easy to see why people imagine our generals and admirals leafing through equipment catalogues and earmarking the shiniest new tanks, ships and helicopters for their Christmas list. But the extra funding simply is not enough to allow any kind of frenetic spending spree.
Last March, the House of Commons Public Accounts Committee published a report on the MoD’s Equipment Plan 2023-33. Drawing on the meticulous work of the National Audit Office, it concluded that the Ministry of Defence had a shortfall between its capability requirements and the resources available of at least £16.9bn, though some commentators have suggested it may be closer to £20bn. That means a huge gap between what governments have said the armed forces can do, and what they can actually afford to do.
In that context, the additional resources of a spending level of 2.5% of GDP rather than the current 2.3% are not a gold rush or a windfall, but rather remedial measures to make good on filling the gaps that have opened up in the UK’s military capabilities. If we are lucky, the new funding will restore the status quo ante. But the MoD will be patching its existing ceiling rather than paying for a new roof.
Merz will find a similar problem in Germany. It will absorb tens of billions of Euros to restore the Bundeswehr’s current inventory to operational capability, with maintenance having declined so severely over the past 15 or 20 years.
Does the electorate appreciate this? Will they be understanding when what is billed as huge new investment results in armed forces with little visible change in size or capability, but with further decline halted and poorly concealed gaps made good? The Government’s rhetoric has inevitably raised expectations, emphasising the historic scale of the new funding. There is still a huge task in communicating why the results of that investment may not be obvious, otherwise voters might well be disappointed when they expect to see where their money has been spent.
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