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The Financial Context for the 2015 SDSR: The End of UK Exceptionalism?

Malcolm Chalmers
Briefing Papers, 4 September 2014
Defence Spending
On current projections, the UK will fall below the NATO target for defence spending in 2015

At the Wales NATO summit – ongoing at the time of writing – the UK government has been a strong supporter of efforts to encourage all member states to meet the alliance’s target of spending at least 2 per cent of GDP on defence.

'The Financial Context for the 2015 SDSR: The End of UK Exceptionalism?' argues that on current spending plans and growth projections UK defence spending is set to fall below the NATO 2 per cent target for the first time next financial year, to an estimated 1.88 per cent of GDP in 2015/16.

The briefing shows how existing Ministry of Defence (MoD) planning assumptions (for modest real-terms growth in its budget after 2015/16) would, in the context of projected GDP growth, see spending falling to around 1.7 per cent of GDP by 2020/21. Given wider government plans for spending cuts after 2015/16, however, this could prove over-optimistic. Further cuts in the 2015 Spending Review (of between 4 per cent and 10 per cent in real terms over five years) could see defence spending falling to between 1.5 per cent and 1.6 per cent of GDP in 2020/21.

Given the risk of further such cuts, the MoD’s interests would be best served by conducting the next SDSR in parallel with (rather than subsequent to) the 2015 Spending Review. This would help to ensure that government leaders (in both Nos. 10 and 11 Downing Street) are fully aware of the capability consequences of proposed spending cuts before they are finalised.

Because of the short time involved in such a schedule – perhaps only three months after the election before key capability choices need to be made – the MoD will need to complete much of the detailed work on the feasibility and cost-effectiveness of a range of possible policy options in advance of the May 2015 General Election. Without such work, ministers could find themselves – as in 2010 – being forced to make key decisions without adequate supporting data.

About the Author

Professor Malcolm Chalmers is Research Director and Director (UK Defence Policy) at RUSI. 

For his full bio, click here.

Malcolm Chalmers
Deputy Director-General

Professor Malcolm Chalmers is Deputy Director-General of the Royal United Services Institute (RUSI). His research is focused on UK... read more

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