Keir Starmer and Rachel Reeves have announced their latest rescue remedy for Britain’s economy. Old promises – good jobs, thriving small businesses and regional equality – will now be delivered by an increased military budget, used to buy equipment from the private sector. More military spending is not a tonic, however, but a poison that will worsen our economic ills and make Britain less safe in the long run.
Assurances of prosperity for small businesses and ex-industrial towns rest on a misleading depiction of military spending. Last financial year, 56% of Ministry of Defence spending with UK businesses went to London and the south of England. In the same year, nearly 40% of the £37.6bn military equipment budget went to just 10 multinational companies. “Slashing red tape” and granting small businesses more access to the military budget will not build a family-run missile factory on every street corner of ex-industrial Britain.
BAE Systems, leading weapons dealer to government and happy recipient of 15% of the equipment budget, has just declared record orders and rising profits. Military contractors are large multinationals that reward their asset manager shareholders from government contracts: since 2015, BAE has paid out £9.8bn to shareholders while receiving more than a fifth of its global revenue each year from the British government.
While in a few specific areas, communities are reliant on jobs at military contractors, this is the result of public spending decisions, not the benevolence or dynamism of private companies. Although the Barrow-in-Furness shipyard now relies on contracts to build nuclear submarines, in the early 1960s its most profitable work was making engines for British Rail. Policy choices have left communities dependent on military contracts because of divestment from public services and civilian industry.
Regardless, military spending is not a viable strategy for growth or the creation of good jobs nationally: Ministry of Defence spending on business directly supports 130,000 full-time jobs in the UK; if including supply chains, this rises to 209,000 or 0.83% of the workforce. Even with the military budget set to grow further over the next parliament, the industry it supports is too small to transform the nation’s economy.
More important, the connection between military spending and job creation has weakened over time. Despite falling as a share of GDP, Britain’s military budget has grown in real terms since the early 1980s – the height of the cold war – yet at the same time more than half of jobs in the military industry have been lost. The military sector is increasingly a hi-tech employer that relies less on manufacturing and more on IT and engineering jobs in the south of England. Modelling in the US and continental Europe suggests that investment in public services, environmental protections or renewable energy creates more jobs and more economic output than military contracts. This is intuitive: while new energy infrastructure provides long-term value by reducing bills, a faulty tank or aircraft carrier has little connection to the rest of the economy.
Perhaps worst of all, the government is claiming that military spending is Britain’s economic salvation while wearing fiscal handcuffs of its own making. Military investments have already come at the cost of the foreign aid budget, and the chancellor has announced that a fund primarily for green industrial development can be used on military spending. A commitment to higher defence spending in the next parliament has been swiftly followed by a reported intention to cut social security. These cuts will take from those who need support most and leave deep economic scars, reducing the money spent in the economy. The poorest in society are told that state coffers are empty while, for defence contractors, abundance is more than a political horizon.
The government and the opposition are united in presenting “rearmament” as a difficult but necessary step – to keep Britain safe in a turbulent global order. This conceals the reality that Britain already has the world’s sixth largest military budget, which funds deployments that sprawl across the globe. There is little discussion of how bases in Oman and Bahrain keep us safe or of why paying £9bn to Mauritius to keep the US air force on the Chagos Islands is necessary for national security. Britain’s fantastical efforts to remain a global military power have left a trail of blood in Palestine, Yemen, Libya, Iraq and Afghanistan in this century alone. This litany of devastating intervention and military collaboration has nothing to do with national defence.
Perversely, faced by a US administration that is redrawing its relationship with Europe, there is an opening for Britain to reconsider its alliance with US global dominance. To focus on national defence and regional collaboration, the government should draw down British military resources in the Middle East and the Asia-Pacific that are devoted towards upholding US power and a vain attempt to compete with China.
Amid global instability, there is an opportunity to focus on genuine national and economic security – energy independence, public services and resilient industries – instead of sacrificing our societal health at the altar of military power.
Khem Rogaly is a senior research fellow at the thinktank Common Wealth, where he leads a research programme on the military industry
