Capital Economy, Business and Finance
Coffee in hand after his late night in parliament (see above), Rishi Sunak told reporters on a plane to Warsaw yesterday that Britain would raise defence spending to 2.5 per cent of GDP by 2030, delivering an extra £75 billion for the MoD over the next six years. Three points to note: first, this will mean a roughly £20 billion increase in annual defence spending over the 15 years to 2030, allowing for inflation. Secondly, it probably won’t be unwound after the election, to judge by Labour mood music, which emphasises defence and security cooperation as the bridge back to closer ties with Europe. And third, it’s of the moment. The Stockholm International Peace Research Institute’s annual survey of defence spending, released on Monday, showed a sharp 7 per cent uptick in global spending to a record $2.4 trillion total, led in percentage terms within Europe by Poland and Finland (75 and 54 per cent up respectively in 2023), Ukraine (51) and Russia (24). In absolute terms the US still spends more on defence than the next 10 biggest spenders combined. China is the next biggest spender by far, with a shipbuilding capacity 230 times bigger than America’s. It’s a great time to be building weapons.