Britain needs a plan to invest in defence

April 6, 2026 adminsr

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The Iran war has brutally exposed Britain’s lack of military readiness and shortage of defence assets, with its navy unable to immediately deploy an advanced warship even after a UK air base on Cyprus was targeted by drones. Donald Trump’s jibe that “you don’t even have a navy” was unfair, but hit home. Now, as the FT has reported, Britain risks losing cutting-edge defence technology amid delays in publishing the government’s 10-year defence investment plan (DIP).

The root of the problem is the failure to find sufficient funds for military modernisation after years of under-investment. Sir Keir Starmer’s government is committed to lifting spending on defence and intelligence to 2.6 per cent of GDP from 2027. But it has only a vague “ambition” to raise it to 3 per cent in the next parliament, and to the 3.5 per cent Nato target by 2035.

The UK is spending a lot more on modernising its nuclear deterrent — made even more vital to Britain and Nato by the uncertainty over Trump’s commitment to the US nuclear “umbrella”. But the alliance estimates UK spending, including nuclear, was just 2.31 per cent of GDP in 2025, below the Nato average. Some countries are cranking up spending much faster; Germany has pledged to reach 3.5 per cent by 2029.

The squeezed public finances inherited by Labour, exacerbated by continuing sluggish growth, require agonising trade-offs. Yet despite major wars in Iran and Ukraine, the government has failed to make the necessary case for rearmament, even as it struggles to rein in spiralling expenditures elsewhere; social security spending is now five times the defence budget. Funding shortfalls may be partly why publication of the DIP, initially expected last autumn to flesh out how Britain would meet goals set by a major defence reviewkeeps being pushed back.

The Ministry of Defence has rightly also focused on the need to cut delays and cost overruns in weapons procurement. The rapid evolution of combat and technology makes it vital to get future planning right. But the delay is having knock-on effects — including raising doubts about the UK among key partners. Japan is fretting over Britain’s commitment to a three-way next-generation fighter project with Italy, the Global Combat Air Programme, that aims to challenge US dominance in military technology. Separately, Italy’s Leonardo warned it would reconsider investments in the UK if the government did not proceed with a £1bn battlefield helicopter contract, until the Treasury issued a last-minute approval days before the defence group’s bid was set to expire in February.

While Starmer last month denied the stalled DIP was holding up defence contracts, FT reporting suggests that the UK is in danger of losing out on vital technology — some of which was developed in Britain or with British support. Executives say some promising start-ups are considering relocating to the US, Germany or elsewhere, while others are at risk of running out of funding.

While long-established defence contractors can withstand delays, promising young companies may struggle to secure the next round of funding without contracts in place. But these companies provide the pioneering AI and drone technologies needed for modern warfare. City financiers say pension funds and insurers are primed to invest in modernising defence but need “demand signals” from government.

Labour has pledged to support ordinary working people, but keeping citizens safe is the first duty of any government. It needs to be more honest with the public about the choices the UK faces — a huge gap remains between its defence rhetoric and reality — and to continue to look for ways to raise defence spending more rapidly. But to avoid losing the confidence of allies and defence groups alike, it needs to come up rapidly with a credible and coherent policy to invest what funds it has.