Can Britain afford to spend much more on defence?

Britain spent more than 50 per cent of its income on defending Europe from Hitler, but even 5 per cent will be a very tough sell for the government in 2025, as Sean O’Grady explains

Keir Starmer has declared that Europe is “facing a once-in-a-generation moment for the collective security of our continent”. He has called on European nations to increase defence spending: “Non-US Nato nations have already increased defence spending by 20 per cent in the past year, but we must go further.”

President Donald Trump, to the alarm of many, has suggested the present Nato target for member states to spend 2 per cent of their national income on defence should be raised to 5 per cent while US defence secretary Pete Hegseth suggests that the US should de-prioritise protection of Europe in favour of the Indo-Pacific region. Given Vladimir Putin’s ambitions and actions, there are strong arguments for spending more on security, but equally strong countervailing political pressures.

Could Britain spend more on defence?

At present, the UK devotes 2.3 per cent of its GDP to defence – £57bn last year – and has been one of the more financially conscientious members of Nato. That is due to rise by £3bn per year by next year. Given sluggish GDP growth, that is likely to push the proportion of GDP higher, making progress towards fulfilling Labour’s manifesto pledge to “set out the path to spending 2.5 per cent of GDP on defence”. Starmer has reportedly “overruled” his chancellor by demanding more resources for the armed forces, but there is still no sign of the “path” towards 2.5 per cent … or any kind of deadline. However, an eventual figure of 5 per cent is just about conceivable.

How would a 5% target be reached?

Painfully. In very broad terms, it means doubling defence spending, roughly an additional £60bn a year. That would result in Britain spending more on “war” (or deterring wars) than, for example, education. It would also mean either deep cuts in public spending, more borrowing, or higher taxes, all of which politically are extremely difficult. In terms of presentation, the government could try to take borrowing for essential defence spending out of the fiscal rules; or it could impose a special “national security” surcharge on tax bills, earmarked for the defence of Europe.

Could that be done?

It would mean winning the argument that defending Ukraine, Poland, Estonia, Romania and elsewhere is not only necessary but desirable. Many in Britain are yet to be persuaded that Putin wants to occupy even more of Europe; and in any case they say no to British troops being stationed on the Ukraine-Russia border – a kind of isolationism. Despite the historical precedent of Nazi (and Soviet) expansionism, the case that “Putin won’t stop at Ukraine” is hard to prove.

What about taking the frozen Russian assets?

They’re supposed to be for Ukrainians. They amount to about $300bn across the West, so they would be very handy but would not pay for everything indefinitely.

Does the uncertainty about defence spending matter?

In tactical terms, it sends a message to friend and foe alike that, for all the statesman-like rhetoric, Starmer is not being as good as his word … no doubt to the irritation of Trump and glee of Putin.

More practically, it means the British defence industry can’t tool up and step up production in the absence of firm contracts – and such projects can take time to design and deliver. It leaves Britain’s armed forces even more reliant on buying US kit “off the shelf”, and, perhaps, subject to diplomatic pressure from the White House as to its usage.

We’ve done it before?

Yes, but not since the 1980s and the “peace dividend” of defence savings that started to roll in after the end of the Cold War in 1990. The lighter defence burden has largely paid for the ever-rising cost of the NHS and an ageing population. So the money has been spent, so to speak, and taking it out of the welfare state and transferring it back to security is obviously “challenging”.

A lot depends on how secure voters feel. During the heroic struggles of the Second World War, when the dangers hardly needed to be proven, the proportion of national income spent on the defence of the realm exceeded 50 per cent of national income, and a little less than that in the Great War (as well as a huge trove of British assets being mortgaged to the Americans in both cases). Only if the British people fear a threat from Russia will they support the necessary taxation.