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United Kingdom Defence and Security Report Q4 2010
Business Monitor International, Oct 2010, Pages: 122
The United Kingdom Defence and Security Report provides industry professionals and strategists, corporate analysts, defence and security associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the United Kingdom's defence and security industry.
A September 2010 article in the Telegraph by Professor Michael Clarke, director of the Royal United Services Institute, suggested that Britain’s external security outlook is more uncertain than it has been for 75 years. Clarke cited several reason for this perceived, precarious position, most importantly the US’s shifting priorities, China’s global rise and the dynamics of that country’s relationship with India. Meanwhile, security threats in Europe, while much reduced, remain. Britain would have to work closely with other leading European powers, most notably France and Germany, in any future intervention in the region, whilst simultaneously contending with Russia’s attempts to re-establish influence in the region. At the time of research, the UK was undertaking a large-scale Strategic Defence and Security Review, launched soon after the coalition government took office in May 2010. On September 17, the government’s new National Security Council (NSC), chaired by Prime Minister David Cameron, will start discussing the review’s findings with a view to making substantial cuts to the defence budget in line with the coalition’s deficit-reduction programme.
The implications for Britain’s armed forces, and its defence industry, are very serious indeed. The previous Labour government committed the UK to several highly expensive overseas conflicts, most notably in Iraq and Afghanistan, but also in Kosovo and Sierra Leone, but, according to many analysts, did not provide the funding required fully to support these operations, causing the armed forces’ support for the operations to become highly stretched. Perhaps more damning is the accusation that Labour built up an “unfunded liability“ in defence of GBP37bn over the next decade, including GBP20bn of vaguely budgeted equipment orders. Out of this perceived chaos, the new government is struggling to bring order. Despite the new government’s commitment to British presence in Afghanistan, as well as the renewal of the country’s Trident nuclear submarines, estimated at between GBP20bn and as high as GBP100bn by various sources, defence is almost certain to be one of the areas hit hardest by budget cuts. The Economist estimates that defence “faces a cumulative squeeze” of 10-20% over the next five years.
The cuts are already having an impact on the arms industry, In September 2010, defence giant BAE announced 946 job cuts in the UK, as reported by The Guardian in that month. BAE said that it would be focusing redundancies on its warplane division, but that shipbuilding operations could also be hit hard due to cuts in naval spending.
The analyst expects the overall number of military personnel to be cut significantly, from 157,090 in 2010 to 150,900 in 2014. We forecast that British defence expenditure will shrink as a proportion of GDP from 2.49% in 2010 to 2.37% in 2014, as defence cuts bite. However, in cash terms, expenditure will rise from GBP35.56bn to GBP39.15bn. A revision in these figures may be necessary after the coalition government has made decisions on defence policy, following the strategic defence and security review.
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