What will it cost to defend Britain from a growing Russian threat?

Britain can hardly afford to spend more on defending itself from Vladimir Putin but, says Sean O’Grady, it may have little practical choice

New secretary general of Nato Mark Rutte has warned that Russia is preparing for “long-term confrontation... with Ukraine, and with us” and has called for more defence spending to combat threats from Russia and its allies: China, Iran and North Korea.

In the former Dutch PM’s chilling words: “If we don’t spend more together now to prevent war, we will pay a much, much, much higher price later to fight it. Not billions, but trillions of euros. That’s if we come out on top... and that’s if we win”.

He is far from alone in urging Western powers to adopt a “shift to a wartime mindset”. It will be a big ask, not least for the fiscally challenged UK.

What does Rutte want?

Rutte’s inaugural speech didn’t include a specific goal, but there are widespread reports that he’d like to see the target for defence spending among the 32 Nato member states raised from 2 per cent to 3 per cent, and he has even mentioned a more ambitious figure.

At a press conference, Rutte stated: “I decided today not to mention a new figure. We will need more time to consult amongst allies about what exactly the new level should be. But it is considerably more than 2 per cent. But let me be very frank, if you would only spend more and not spend better, you have to go to at least 4 per cent.”

What does the UK spend?

More, as a proportion of national income, than some Nato allies such as Luxembourg, but less than others such as Poland. Britain presently exceeds the 2 per cent target, at 2.3 per cent of GDP on the Nato definition, and with a respectable record of assisting Ukraine before many others. In cash terms, in the last fiscal year the UK spent some £53.9bn on defence, not all of it specifically devoted to Nato commitments.

What will the UK spend?

That’s the big question, with so much at stake. In its manifesto, Labour promised to “set out the path to spending 2.5 per cent of GDP on defence”. This commitment has been reiterated many times since the general election, but it is fair to point out that national defence, in terms of that financial commitment to Nato, wasn’t one of the recent “milestone” priorities set out by the prime minister. So there remains no timeframe on the pledge.

It will be the subject of the recently launched comprehensive spending review, run by the Treasury, and so should be consistent with the parallel Strategic Defence Review. That said, the chancellor, Rachel Reeves has indicated that any more money for the armed forces will need to be found from elsewhere in the public spending universe, such is her “ironclad” devotion to the fiscal rules.

So will defence spending go up?

Yes, but probably not as much as all concerned would wish. Given Britain’s anaemic growth outlook, even a relatively large boost in the proportion of national income devoted to armaments wouldn’t translate into such a particularly meaningful cash increase in defence budget.

But we used to spend much more?

Indeed. In the 1950s, before the final dissolution of the British Empire and the winding down of other global commitments, it was around 7 per cent of national income, and during the Cold War it ran consistently around the 4 per cent mark. The big change came with the fall of the Berlin Wall, ending the Cold War and, broadly, the easing of international tensions that followed. The “peace dividend” saw defence spending cut to a low point of below 2 per cent of GDP in the “austerity” era of the 2010s. The resources released by this made it easier to tackle demographic challenges facing the NHS and social care. Of course the reverse situation now applies, meaning very difficult choices must be made.

What difference will Donald Trump make?

The president-elect has already pushed Nato members to “pay their bills”, under the threat of otherwise letting the Russians “do what the hell they like”. As Rutte acknowledges, the threat has had its desired effect. However, Trump may double down in his demands and force powers such as Britain to raise their spending or else lose the American defence umbrella. Thus, how much Britain spends on the armed forces is a decision that will, practically speaking, be out of the hands of Rachel Reeves and Keir Starmer.

Would the Conservatives do more?

They didn’t while they were in office, notwithstanding the visible and tangible support sent to Volodymyr Zelensky. The last government promised “a new commitment to increase spending on defence, reaching 2.5 per cent of GDP in 2030” in their last manifesto. So they had a clear deadline, but the same figure as Labour.

What will happen?

In order to fundamentally change the political terms of debate across Nato, politicians will need to persuade the public that Russia really does pose an existential threat to peace and security. Many people simply don’t believe that proven Russian aggression in Georgia and Ukraine necessarily means that Putin’s tanks will roll into Poland or Estonia in the coming years. For the growing number of isolationist Americans, the secondary argument – that it matters to the US if Russia dominates Europe – also needs to be won. This will be especially difficult under a transactional “America First” style of presidency. Appeasing Russia is a much more attractive option to the United States, in which case Europeans will need to spend even more on their own defence, and build a suitable structure of collective security to replace Nato. The debates are only just beginning.