The United Kingdom, first defense budget in Europe? True or false

23th November 2018 Nicolas Gros Verheyde

(B2) The United Kingdom, which for many years has been the country spending the most on defense in Europe, is on the verge of losing its first place...

*Changing of the Royal Guard Grenadiers (credit: MOD Uk)*

A very symbolic but also very political question. The whole British argument indeed, especially during Brexit, has been to give the leading role in terms of European security to the United Kingdom... With a ringing and stumbling argument: the British defense budget is the first in the class European. A statement that is no longer accurate.

Over the exchange rate

In fact, everything depends on the Pound Sterling/Euro exchange rate. Thus, with a rate of 1,15 (like last week), the United Kingdom remains in first place in the European ranking of defense budgets, whether we take the budgets planned for 2018/20 19 (37,8 billion £) or for 2019/2020 (£38,8 billion).

At a rate of 1,12 – like at the start of this week with the fall of the pound and the vagaries of local Brexit politics – the British budget is falling behind the German budget. Germany should indeed dramatically increase its defense budget for 2019 (fruits of growth requires) and increase to 43,2 billion euros, according to the latest version of the finance bill voted by the Bundestag (1).

If the exchange rate goes up, the British budget will come back ahead. But this time at the top of the class is counted.

A gradual catch-up

Whatever the exchange rate or the annual changes, there is indeed a basic trend. Germany is in the process of catching up, at least in budgetary terms, with its defense effort. The German budget has already moved into second place, relegating France to third place (35,8 billion for 2019). In 2020 or 2021, either in a short period of time at the strategic level – the German budget should move to first place, relegating the United Kingdom to second place… This for certain years.

A very short-term strategic development

In terms of growth, the good health of the German budget, and the commitments of its political leaders, we can predict that the progression of the German budget will continue. This is a notable strategic change... at least in financial terms, in terms of equipment capacities, industries or research (2). On the day of Brexit, March 29, even if the two events are not linked, it will be for the United Kingdom a certain 'slap in the face' to what is (rightly) a national pride.

(Nicolas Gros-Verheyde)

The very specific UK budget period runs from April to March, unlike the current annual budget periods on the continent. Which complicates the rankings. To be able to compare the two budgets fairly, we have operated a small rule of three, with an equalization smoothing the British budget over an annual period. Which gives £38,55 billion for 2019.
The effectiveness of armies obeys data other than those of mathematics. And German historical and constitutional constraints will always mean that the army will not be Germany's primary political instrument, unlike what is happening in France and Great Britain. The French and British armies will therefore remain in the lead in terms of operational and expeditionary dynamics.

The amount of the budget makes it possible to summarily classify European defenses but not necessarily to make precise comparisons. With a lower budget for years, France has demonstrated a much superior military power, whether through the spectrum and volume of its capabilities, its global presence or its results in operations. It is today, without question, the leading military power in Europe.

The superiority of the British defense budget only proves one thing: that the United Kingdom has the most expensive defense in Europe.

At purchasing power parity (the economies of the two countries are very comparable) we can find several explanations for this paradoxical performance gap in the respective defense budgets:
– the United Kingdom has not finished re-capitalizing its defense after the exhaustion suffered in the past decade (Afghanistan, Iraq): wear and tear on equipment, loss of human capital, overinvestment in operational emergencies at the expense of the preparation of the medium and long term future;
– the salaries of British soldiers are significantly higher than those of their French counterparts (about double for officers);
– the British apply a doctrine (not to say a dogma) of industrial subcontracting, which is more comfortable in the short term because it limits the peaks of investments required for asset acquisitions but increases costs in the long term, whereas the French have a more conservative approach to this economic model and are more likely to assess its opportunity on a case-by-case basis. The respective MRTT programs are eloquent in this regard: for the same A330 aircraft, the United Kingdom inflicted a ruinous PPP on itself for decades (Phenix), while France launched itself with fanfare for a good decade;
– better cost control in armament programs in France, particularly visible on combat aircraft (Rafale versus Eurofighter and F-35) or MRTT tankers (British PPP for 14 A330 Voyagers, at a ruinous cost per flight hour in order to remunerate the private investors involved, versus 15 A330 Phénix acquired by France as assets), with the consequence of structural differences in the mass of acquisition and implementation costs (the lower performance in the management of programs can itself be explained by a loss of technical competence and a greater dependence on its industrialists, to whom the British State has subcontracted the expertise).

One thought on “The United Kingdom, first defense budget in Europe? True or false"

Spock

November 24 2018 to 15: 43

The amount of the budget makes it possible to summarily classify European defenses but not necessarily to make precise comparisons. With a lower budget for years, France has demonstrated a much superior military power, whether through the spectrum and volume of its capabilities, its global presence or its results in operations. It is today, without question, the leading military power in Europe.

The superiority of the British defense budget only proves one thing: that the United Kingdom has the most expensive defense in Europe.

At purchasing power parity (the economies of the two countries are very comparable) we can find several explanations for this paradoxical performance gap in the respective defense budgets:
– the United Kingdom has not finished re-capitalizing its defense after the exhaustion suffered in the past decade (Afghanistan, Iraq): wear and tear on equipment, loss of human capital, overinvestment in operational emergencies at the expense of the preparation of the medium and long term future;
– the salaries of British soldiers are significantly higher than those of their French counterparts (about double for officers);
– the British apply a doctrine (not to say a dogma) of industrial subcontracting, which is more comfortable in the short term because it limits the peaks of investments required for asset acquisitions but increases costs in the long term, whereas the French have a more conservative approach to this economic model and are more likely to assess its opportunity on a case-by-case basis. The respective MRTT programs are eloquent in this regard: for the same A330 aircraft, the United Kingdom inflicted a ruinous PPP on itself for decades (Phenix), while France launched itself with fanfare for a good decade;
– better cost control in armament programs in France, particularly visible on combat aircraft (Rafale versus Eurofighter and F-35) or MRTT tankers (British PPP for 14 A330 Voyagers, at a ruinous cost per flight hour in order to remunerate the private investors involved, versus 15 A330 Phénix acquired by France as assets), with the consequence of structural differences in the mass of acquisition and implementation costs (the lower performance in the management of programs can itself be explained by a loss of technical competence and a greater dependence on its industrialists, to whom the British State has subcontracted the expertise).

Comments closed.