U.K. Prime Minister Keir Starmer made a surprise announcement to the House of Commons on February 25, outlining plans to increase the British defense budget to 2.5 percent per year by 2027. Starmer noted to parliament that the funding would be reallocated from the U.K. foreign aid budget to defense, thus siphoning from one spending bucket to another without increasing total government expenditure.
Starmer stated that the country faces “extremely difficult and painful choices”, hence shifting monies around as an internal solution.
The expenditure reallocations will push the defense topline up from its current 2.3 percent of GDP to 2.5 percent, with the aid budget dropping from 0.5 percent of GDP to 0.3 percent.
Coupled with his pledge to bolster the defense budget in the near-term, Starmer also stated that his government’s goal is to raise annual military expenditures up to 3 percent of GDP “during the next parliament”, which is expected to operate from 2029 to 2034.
But even that goal came with a qualifying “subject to economic and fiscal conditions”.
While Starmer’s pledge to spend more on defense may appeal to the Trump administration just ahead of the prime minister’s trip to Washington on February 26, the uptick is less than it seems and will do little to adjust some of the realities confronting British defense and security planners.
For starters, the U.K. – like many other Alliance members – has used NATO’s defense expenditure definitions to wed pensions payments for retired soldiers into its topline funding level. Without that funding line, Britain’s actual defense budget drops to 2-2.1 percent.
Ditto its annual £3 billion ($3.8 billion) contribution to the Ukrainian defense effort, which comes from the U.K. Treasury’s Special Reserve budget but for accounting purposes is added to overall defense spending figures (though not the core defense budget).
While these are allowable under NATO accounting rules, they illustrate how a symbolic target figure such as NATO’s minimum investment requirement of 2 percent of GDP can be padded with line items that do not contribute to military readiness levels.
And military readiness levels matter, particularly for an armed force that once was once considered “Tier 1”, but is no longer.
Instead, what has occurred is a slow, steady diminishment of a once renowned military.
Though there are many reasons for this relative decline, one of the most critical is the austerity cuts imposed by the former coalition government of then-Prime Minister David Cameron following its formation in May 2010.
Over a period of 13 years, annual defense spending for the U.K. declined in real terms from the 2009-2010 fiscal year (FY09-10) through 2023, at which point the budget returned to 2010 levels. This hardly represented a period of expansionary capability, much less capacity, as everything from Harrier jump-jets to self-propelled howitzers, the number of main battle tanks, to the number of troops in the British Army, all fell.
While some older legacy platforms were replaced by more modern, capable equipment, ultimately the British armed forces shrank in terms of what they could bring to bear on the battlefield and for how long they would be effective.
Additionally, with U.K. inflation now rising from 2.5 percent to 3 percent, the top-up funding of around £5-6 billion ($6.3-$7.6 billion) per year expected from the coming increase announced by Starmer will shrink commensurately in terms of overall purchasing power.
In other words, what additional funding will come in the near term will do little to offset the impacts of inflation, force capability and capacity erosion, and differing pressures on the core defense budget.
The latter includes the cost of the Defence Nuclear Enterprise (covering the production and maintenance of the Royal Navy’s nuclear submarines and their propulsion systems and Trident missiles, as well as disposal of retired submarines), which is pegged at £110 billion ($127 billion) – or 38 percent – of the entire 10-year Ministry of Defence Equipment Plan. According to the last National Audit Office (NAO) report the plan suggested a £16.9 billion ($21.4 billion) shortfall between what has been budgeted and what is the estimated total cost of meeting its goals.
As far as force capability erosion, British Defence Secretary John Healy went on record last fall stating that the U.K. armed forces are no longer adequately prepared and equipped to undertake a high-intensity fight. Healy followed that up by announcing a spate of equipment cuts intended to accrue savings of £500 million over five years.
From the vantagepoint of Washington, these words and deeds coming from its closest ally are hardly reassuring.
Hence Starmer’s announcement, which – while unquestionably needed – should be viewed more as a sop to the Trump administration to ease the way to finding some middle ground on issues ranging from the Ukraine conflict, broader European security, and the need for continued U.S. commitment to NATO.
Rather than show up in Washington empty-handed, Starmer recognized the need to come bearing a symbolic gift – particularly as Downing Street seeks to reaffirm its traditional role as bridge between the U.S. and Europe at a time the Trump administration is warning Europe that its attention is fixed firmly on Asia.
Simply voicing displeasure with Trump does little but shift blame when the crux of the message (though not the current tone and delivery) has been remarkably similar across presidential administrations since the 1950s: Europe must spend more on its own defense.
By making his announcement on February 25, Starmer got ahead of the issue and – temporarily at least – defused two critics: the Trump administration, which argues for NATO allies to invest more in defense, and the Labor government’s chief political opposition, the Conservatives, who have pressured Downing Street to declare a timetable for hitting the 2.5 percent of GDP target.
But ultimately, when viewed under the microscope, the defense spending announcement by Starmer does little to move the needle.
Instead, it should be considered for what it is: the start of a national debate on the importance of strengthening U.K. defense and how much politicians and the public are willing to pay to see this happen.
Dan Darling is Forecast International’s director of military and defense markets. In this role, Dan oversees a team of analysts tasked with covering everything from budgeting to weapons systems to defense electronics and military aerospace. Additionally, for over 17 years Dan has, at various times, authored the International Military Markets reports for Europe, Eurasia, the Middle East and the Asia-Pacific region.
Dan's work has been cited in Defense News, Real Clear Defense, Asian Military Review, Al Jazeera, and Financial Express, among others, and he has also contributed commentary to The Diplomat, The National Interest and World Politics Review. He has been quoted in Arabian Business, the Financial Times, Flight International, The New York Times, Bloomberg and National Defense Magazine.
In addition, Dan has made guest appearances on the online radio show Midrats and on The Media Line, as well as The Red Line Podcast, plus media appearances on France 24 and World Is One News (WION).
