Defence of the realms

In the Oval Office yesterday, Keir Starmer promised a big increase in British defence spending in the hope of persuading Donald Trump to stick with his Nato allies in Europe.

So what? It might work – but it might not. The numbers behind Starmer’s pledge to spend 2.5 per cent of GDP on defence, paid for by reducing the UK’s aid budget, are being picked apart. If Trump is unconvinced, the prime minister’s hope of acting as a “bridge” between the US and Europe could flop.

Those numbers:

£59.8 billion – UK defence budget for 2025-6

£13.4 billion – additional spend by 2027

£5.5 billion – savings from proposed cuts to overseas aid

In the Commons on Wednesday Starmer said an increase in the total defence spend between now and 2027 would make up the shortfall and hit the 2.5 per cent target. But that implies the budget would otherwise have been frozen – which is unlikely in normal times and impossible in present circumstances. It also doesn’t explain how the government’s more challenging 3 per cent target for the next parliament will be reached.

The principle of raising defence spending is widely popular. But those questioning the approach include:

• the independent Institute for Fiscal Studies, which says the longer-term raise would require “tough choices and sacrifices elsewhere”, including higher taxes or cuts to existing spending;
• the Conservatives, who point out Starmer hasn’t ruled out using some of the extra defence money for a £9 billion lease-back deal for the Chagos Islands, and argue that cuts to welfare and the civil service could make up the shortfall;
• some Labour MPs who are deeply unhappy about the cuts to overseas aid; and
• the Liberal Democrats, who’ve recommended raising the digital services tax and promoted the idea of a European Rearmament Bank.

Bucks for bangs. Proposed by former chief of the defence staff General Sir Nick Carter and Guy de Selliers, an Anglo-Belgian financier who helped set up the European Bank for Reconstruction and Development, the Rearmament Bank would aim to raise €100 billion for defence manufacturing and procurement.

“The bank’s leverage turns each government euro into ten available to lend,” says Edward Lucas, a security expert who is also involved.

• As a non-EU body it could include allies like the UK while excluding more awkward countries like Hungary.
• Starmer appears onboard, telling MPs the UK is part of “a discussion going on amongst [European] allies as to future funding”.

Org chart hell. But this isn’t just about money. Equally challenging are logistical questions, such as how to

• produce more weapons, especially artillery systems, tanks and ships;
• increase troop numbers;
• unify chains of command; and
• be quick about it.

Growing pains. To become fully independent from the US, the EU would need to fill gaps in air lift capability; Intelligence, Surveillance and Reconnaissance (ISR); deep strike weapon systems and integrated air and missile defence, all of which are currently provided by the US.

Not cheap. The European Commission estimates the EU will need €500 billion in defence finance over the next 10 years. Commission president Ursula von der Leyen has offered to loosen the EU’s fiscal rules so that countries can increase their defence spending, but…

• For the UK, the question remains how to collaborate with the EU on security with no common defence market. A lack of political will might result in a lack of security.
• Even if Trump thaws, the view in Europe is that the US can no longer be relied on. Germany’s incoming chancellor said the quiet part out loud when he talked up the imminent need for European “independence”. He may yet suffer the consequences.

Exhibit A: Kaja Kallas, the European Commission’s vice president for foreign affairs and security, criticised Trump’s Kremlin-adjacent Ukraine comments. On Wednesday, after her arrival in Washington, US Secretary of State Marco Rubio cancelled their meeting citing “scheduling issues”.

This article has been updated