UK military spending needs to rise to 3.6% of GDP, defence figures say

The UK needs to spend 3.6 per cent of GDP on defence if it wants to modernise its military while protecting its nuclear deterrent and meeting Nato obligations, according to internal Ministry of Defence calculations. 

The figure would be a 56 per cent increase on current spending levels of 2.3 per cent, and is widely regarded as a completely unrealistic request in light of the UK’s stretched finances. 

Sir Keir Starmer has given an “iron clad” promise to raise spending to 2.5 per cent, and has launched a root-and-branch review of Britain’s military capabilities that will conclude next year. 

The 3.6 per cent figure would raise spending to about £93bn and take the UK closer to Poland, which shares a border with Ukraine and spends more than 4 per cent of its GDP on defence annually. 

One person involved in the strategic defence review said the mooted 3.6 per cent number was “a wish number doing the rounds around the MoD”. Another said the figure was the number service chiefs “wrote down [in] their Christmas list, knowing that there is no Santa Claus”. 

Without the increase, the UK would have to axe some military ambitions and commitments, people involved with the process warn. 

“Either we are going to have to delete some capabilities or reduce headcount further,” said one senior defence official. “There is a gap between our ambitions and reality . . . even 3.6 per cent may not be enough.” 

Yet the number is far from the highest estimate being fed into the review, according to four people with knowledge of the process. 

The National Audit Office has taken a dim view of some of the ministry’s finalised blueprints. Last year, it called the 2023 defence equipment plan “unaffordable” because it would exceed the available budget by almost £17bn.

The official remit of the review, or SDR, is to “determine the roles, capabilities and reforms” of the British armed forces so that the country is “secure at home and strong abroad”, all within the “trajectory” of raising defence spending to 2.5 per cent of GDP.

The figure would make the UK one of the highest spenders in Nato — and gel with the government’s “Nato first” strategy — even if it falls below a 3 per cent spending target that secretary-general Mark Rutte has suggested in response to Donald Trump’s re-election and the Russian threat to Europe’s security. 

Currently only 23 of Nato’s 33 members hit the alliance’s current spending target of 2 per cent of GDP.

Officials and analysts have also argued spending 2.5 per cent is insufficient to fully revamp the British military, which has been hollowed out by years of under-investment.

“The SDR is about injecting a sense of reality and if we want to do all the things that we say we do — and sustain them — 2.5 per cent is not enough,” the same senior UK official said. “Some hard choices have to be made, and they will be politically sensitive and militarily difficult.” 

General Sir Roly Walker, head of the British army, warned in July that the military needed to modernise and be ready to fight a major war in three years’ time.

Malcolm Chalmers, deputy director-general of the Royal United Services Institute (Rusi) think-tank, told MPs last month that “with any conceivable budget, even if it is a little bit more than 2.5 per cent . . . we will not be able to address [the UK military’s] lack of readiness, war stocks and so on”. 

But Francis Tusa, editor of the Defence Analysis newsletter, said the MoD calculations come from “an attitude that being reasonable will get you nowhere, which is compounded by inter-service rivalry”.

He added: “One trick often deployed is for the services to offer up cuts that chiefs know will be rejected, such as axing the Red Arrows or the Household Cavalry regiment.”

The biggest single item in the UK’s current £60bn defence budget is maintaining and modernising the nuclear deterrent, which Chalmers estimated cost about £12bn a year, a fifth of its budget. 

The Global Combat Air Programme fighter jet and trilateral Aukus defence pact with Australia and the US are both expected to cost billions of pounds, while existing staff costs and pensions account for almost £17bn a year. 

A further £3bn has been pledged annually to Ukraine, while £4.5bn is spent on the Single Intelligence Account, which funds Britain’s three main spy agencies. 

On top of these are the UK’s Nato commitments, which include a “strategic reserve corps” that would typically require two divisions of about 20,000 troops each, as well as accompanying equipment and ammunition.  

But the UK army’s regular forces, currently about 75,000 troops, would struggle to field just one war-ready division. 

General Sir Nick Carter, a former head of the British military, has argued that the ability to generate a credible and sustained division is premised on the UK having an army that is 80,000 strong. 

Defence officials believe the UK does not get enough credit for the nuclear deterrent it has declared to Nato. 

But they also admit the MoD needs to improve efficiency and overhaul a procurement process so cumbersome that it can take years to turn a purchase decision into a contract.

Admiral Sir Tony Radakin, overall commander of the British military, reiterated the importance of such internal reforms last month. 

“There is still too much hierarchy and process. Too much duplication and not enough prioritisation . . .[We need] to overcome the organisational inertia . . . that pervades much of our system,” Radakin told an audience at Rusi. 

The MoD said: “This government has a cast-iron commitment to spending 2.5 per cent of GDP on defence and, as the prime minister has said, we will set out the path in the spring.

“Nato is the cornerstone of global security and the UK will remain a leading contributor to the alliance, alongside our ironclad support to Ukraine.”