Britain has spent little extra on its conventional armed forces in the year since Donald Trump returned to the White House, defence experts and industry executives have warned, with additional expenditure largely eaten up by inflation, housing costs and the UK’s nuclear deterrent.
Sir Keir Starmer’s government has trumpeted plans to increase spending in the wake of Trump’s US inauguration last January as Britain, along with other European nations, has sought to take a more independent defence posture.
Ministers promised in February to increase defence spending to about 2.6 per cent of GDP by 2027 and to 3.5 per cent by 2035. The Ministry of Defence has said its budget increased by £5bn last year.
Despite the rhetoric, defence experts and industry executives have warned little new money has gone on contracts for conventional capabilities. Instead, the bulk has been absorbed by other factors such as inflation and the country’s nuclear programme.
The lack of new money for conventional capabilities has added to concerns that Britain’s military ambitions are not matched by the necessary funding. Experts also questioned the UK’s ability to sustain a naval task force in the Arctic in the wake of Trump’s threats to levy tariffs on the UK and other European nations unless they support his ambitions to take over Greenland.
“There are shortages of ammunition, spare parts and most alarmingly, the defence readiness capability is in a bad state,” said Ben Barry, a retired brigadier and associate fellow at the International Institute for Strategic Studies.
According to Barry, the defence spending increase has “not had any real impact on conventional capabilities” beyond the delivery of some F-35 fighter jets and Apache helicopters.
He said: “The combination of defence inflation and bailing out the nuclear programme is eating up the money available for conventional forces. As indeed is the full pay rise for the armed forces.”
In the event of the UK sending a “naval task force towards the Arctic in the direction of Greenland, it would be quite difficult to sustain it for a longer period”, he said.
Francis Tusa, analyst and editor of Defence Analysis, said £3.5bn of last year’s £5bn increase to the department’s budget was spent on buying back properties in the Annington military housing estate.
Tusa said the balance, according to his analysis of figures from the MoD and reports from the House of Commons library, was spent on the Afghan Relocations and Assistance Policy, higher pay and higher national insurance payments, and the government’s deal to lease back the UK-US military base on Diego Garcia.
Tusa said: “Buying out [property group] Annington was the right thing to do, but when you are also having to do other things, it is incumbent on the MoD to say what new equipment has been delivered.”
“If there is an ongoing contract with industry — notably for the nuclear programme — they are paying but they are not spending otherwise. In terms of major contracts there is nothing.”
The government last year set out a 12 per cent real-terms increase in the defence budget by 2028-29, but most of the growth is planned towards the end of the spending review period. Treasury figures published in December show a real-terms decline in the planned budget of 0.5 per cent in 2025-26 compared with the previous year.
Air Chief Marshal Sir Richard Knighton, chief of the defence staff, last week told a committee of MPs that the military faced an in-year budget shortfall and would have to make difficult decisions.
The impact is being felt across industry. At the same time, the Defence Investment Plan (DIP), designed to flesh out the recommendations of last year’s strategic defence review (SDR) with details about which type of equipment to buy for the armed forces, has been repeatedly delayed.
ADS, the aerospace and defence trade lobby group, said crucial 2025 policy documents such as the SDR had been “welcome moments of clarity for industry”. However, until the committed funding increases in April 2027, “actual contracts seem to be fairly rare”.
For an industry “in need of actual orders”, the trade body added, the focus “must turn to delivering the Defence Industrial Strategy and releasing the delayed Defence Investment Plan as soon as possible”.
Leonardo, which owns Britain’s last military helicopter factory, has warned ministers that the site faces closure by March if it does not secure a £1bn contract to build new helicopters for the army. Unions have warned about the loss of critical skills and a hollowing out of the defence industrial base if the factory closes.
Ambitious plans to build an advanced fighter jet with Italy and Japan have also been caught up by the delayed DIP. The new corporate entity formed by the three companies building the jet — BAE Systems, Leonardo and Japan Aircraft Industrial Enhancement Company — had hoped to secure its first international contract with the three nations at the end of last year. Although work on the programme is continuing, the contract award has been held up as the UK MoD works through its budget, said three people familiar with the situation.
UK industry executives said the general lack of cash stood in contrast with the situation in other European countries, notably Germany, whose governments are placing significant contracts.
Bee Boileau, research economist at the Institute for Fiscal Studies, said spending on core equipment was “a real area of concern” because so much of the UK’s defence budget was earmarked for its nuclear programme and much of the rest would simply replace kit sent to Ukraine.
In 2024-25, the nuclear budget was £10.9bn, almost a fifth of the whole defence budget.
Boileau added it would be a “real challenge” to make sure the increase in spending led to an equivalent increase in the UK’s defence capability, as so many countries were increasing production at the same time with capacity constraints that could drive up prices.
The MoD said it was “getting on with the job of ensuring defence is an engine for growth, including through signing over 1,000 major defence contracts since July 2024, 86 per cent of which are with British companies”.
The department cited “significant deals” for “Navy system guns, Land Ceptor launchers and C8 rifles”. It had also spent £2bn on “30,000 first-person view drones . . . £1bn on new air defence systems . . . and £316mn to deliver the new DragonFire direct energy weapon five years earlier than planned”.
The MoD added: “We are providing the biggest sustained increase to the defence budget since the cold war.”
Additional reporting by Delphine Strauss and David Sheppard