Tag: #militaryspending

ICAEW chart of the week: UK Regular Forces

My chart for ICAEW this week illustrates how soldier, sailor and aircrew numbers have fallen from 338,000 fifty years ago to a new low of 136,000 on 1 Jan 2025. Could this be the turning point now that defence spending is back on the agenda?

Stacked area chart showing decline in the size of the UK Regular Forces from 338,000 in 1975 to 136,000. Analysed between the British Army (167,000 to 74,000), Royal Navy (76,000 to 32,000) and the Royal Air Force (95,000 to 30,000). The numbers fall in the late 1970s then increase again in the early 1980s before falling from 1985 onwards, accelerating in the late 1990s. The numbers stabilised between 2002 and 2008 before starting to fall again, except for a small peak around 2012 and another small peak (at a much lower level) in 2022, before falling again since then. Chart by Martin Wheatcroft FCA. Design by Sunday. Source: Ministry of Defence, 'Quarterly service personnel statistics: 1 Jan 2025'.

The latest armed forces personnel statistics published by the Ministry of Defence on 20 February 2025 report that UK Regular Forces fell from 136,861 on 1 October 2024 to 136,117 on 1 January 2025, which we have rounded to 136,000 for the purpose of my chart this week. This is made up of just under 74,000 members of the British Army, just under 32,000 in the Royal Navy, and just over 30,000 in the Royal Air Force (RAF).

These numbers exclude around 4,000 Gurkhas, 32,000 volunteers in the Army, Navy and RAF Reserves (including some who are mobilised) and around 8,500 other military personnel.

This is a significant decline from the 338,000 regular service personnel (167,000 in the British Army, 76,000 in the Royal Navy and 95,000 in the RAF) that were in the UK’s armed forces on 1 April 1975. 

While some of this decline is due to automation and a shift of some activities from military to civilian staff, the main reason for the decline has been decisions by government to reduce our military capabilities over the past 50 years. Starting with the ‘peace dividend’ following the end of the Cold War, defence spending has been cut by successive governments to fund an expanding welfare state. 

As a result, serving military personnel fell rapidly during the 1990s to reach 208,000 on 1 April 2000 (110,000 in the British Army, 43,000 in the Royal Navy and 55,000 in the RAF). Numbers started to fall again from around 2005, before accelerating downwards during the austerity years of the 2010s, and then again in the past few years following the pandemic and the energy crisis.

Recent debate about the capacity of the British Army to deploy a peacekeeping force to Ukraine has highlighted how few soldiers the UK now has, given our existing commitments and an increasingly concerning international security position.

Overall, the 136,000 UK Regular Forces comprise around 4% of the 3.4 million total military personnel in NATO. In 2024 this comprised 1,300,000 in the US armed forces, 1,383,000 in EU countries who are also members of NATO (including 216,000 Polish, 205,000 French, 186,000 German, 171,000 Greek and 117,000 Spanish soldiers, sailors and aircrew), Türkiye 481,000, UK 138,000 (last year), Canada 77,000 and other non-EU European countries 39,000 (mainly Norway 24,000). 

This may not be the nadir for the UK armed forces in terms of military strength, as numbers are likely to continue to fall over the next few quarters. However, the indications are that the UK is likely to switch to a path of increasing both defence spending and the number of soldiers, sailors and aircrew as it responds to calls from the US for European countries to increase their contribution to NATO and, more importantly, to address a much higher international risk environment.

This chart was originally published by ICAEW.

ICAEW chart of the week: Defence spending battle lines

My chart for ICAEW this week takes a dive into the £53.9bn Ministry of Defence expenditure in 2023/24 ahead of what is likely to be a charged debate about defence spending in the coming year.

Two column chart with parliamentary funding of £54.1bn on the left and MOD expenditure analysis of £53.9bn. The left hand column comprises £36.0bn from net expenditure £45.2bn minus depreciation of £9.2bn, pus reconciling items of £2.6bn and capital expenditure of £15.5bn. The right-hand column consists of £17.2bn capital programme, £12.2bn for infrastructure and equipment support and inventory, £2.6bn for Defence Nuclear, £3.9bn for arms-length bodies and other spending, £14.7bn for military and civilian personnel and admin, and £2.6bn for military operations. 10 Jan 2025. Chart by Martin Wheatcroft FCA. Source: Ministry of Defence, 'Annual Reporting and Accounts 2023/24'.

My chart of the week illustrates how parliamentary funding for the Ministry of Defence (MoD) amounted to £54.1bn for the year ended 31 March 2024 while summarising the MoD’s expenditure analysis of £53.9bn between £17.9bn for the capital programme, £12.2bn for infrastructure and equipment support and inventory, £2.6bn for Defence Nuclear, £3.9bn for arms-length bodies and other spending, £14.7bn for military and civilian personnel and admin, and £2.6bn for military operations.

The parliamentary funding of £54.1bn was used to pay for £36.0bn of day-to-day spending (being net expenditure reported in the accounts of £45.2bn less non-cash depreciation and impairments of £9.2bn) and £15.5bn in capital expenditure, after net reconciling items of £2.6bn (the largest being to exclude an exceptional £2.7bn gain from changes in discount rates).

The £17.9bn incurred on MoD’s capital programme during 2023/24 is higher than the total for capital expenditure because it includes research and development and capital grants that are expensed in the revenue and expenditure statement. Most of the amount spent relates to building or upgrading military equipment for the armed forces, ranging from Astute Class nuclear-powered and Dreadnought Class nuclear-powered ballistic missile submarines and Type 31 frigates for the Royal Navy, remotely piloted Protector surveillance and strike aircraft and radar upgrades to the Typhoon fighter for the Royal Air Force, through to Ajax armoured fighting vehicles and Chinook heavy-lift helicopters for the Army. It also includes investment in digital technology, back-office automation and investments in new military accommodation. (Existing military accommodation has been brought back in house since the end of the financial year).

The £12.2bn incurred in non-capital spending on infrastructure and equipment and inventory comprised £5.0bn to maintain and support infrastructure, £5.7bn to maintain and support equipment, and £1.5bn on inventory. A further £2.6bn was spent by the Defence Nuclear organisation to support the UK’s strategic nuclear deterrent capability, while £3.9bn went on arms-length bodies and other spending, including £1.3bn on the Defence Equipment and Support (DE&S) organisation that manages defence procurement, £0.2bn for the Defence Science and Technology Laboratory, the Submarine Delivery Agency and other arms-length bodies, £0.7bn for war pensions, and £1.7bn in other costs.

Personnel and admin costs of £14.7bn comprised £11.0bn for 151,905 full-time equivalent service personnel, £1.8bn for 70,881 full-time equivalent civilian and other staff, and £1.9bn in administration costs. This excludes £5.1bn in combined net expenditure for the Armed Forces Pension Scheme and Armed Forces Compensation Scheme that is reported separately from the MoD’s accounts. 

Incremental spending on military operations amounted to £2.6bn in 2023/24, of which £2.2bn (£1.2bn capital and £1.0bn resource) went to support Ukraine and just under £0.2bn was spent on operations in the Middle East, while £0.2bn or so was incurred on other operations elsewhere in the world and on conflict prevention, stabilisation, security and peacekeeping activities.

The net expenditure of £53.9bn reported by MoD in 2023/24 was equivalent to just under 2.0% of GDP, being the majority of the approximately 2.3% of GDP the UK says it currently spends on defence and security for NATO purposes. The difference mainly relates to the cost of armed forces pensions not included in the MoD accounts, spending on the UK’s security services, and spending on counter-terrorism activities.

The UK government has already set out an ‘aspiration’ for UK defence and security spending to reach 2.5% of GDP by the end of the decade, but the return of President-elect Donald Trump to the White House is likely to result in pressure on NATO members to meet an even higher target.

During his first term, President Trump floated the idea of a 4% NATO target, which would have required the UK to spend the equivalent of an additional £47bn of spending based on GDP in 2023/24 and more than £50bn a year extra in future years. Even a more modest target of 3% of GDP would require an extra £19bn (or £20bn in future years) to be found.

Finding such large amounts of money would pose a huge challenge for any government at the best of times, but the current very fragile state of the public finances means the stretch is even greater now – adding to the headaches that are no doubt being inflicted on the Chancellor as she seeks to balance the books over the remainder of the decade.

Definitely time to watch this space.

This chart was originally published by ICAEW.

ICAEW chart of the week: Global military spending

While the UK commits to increasing its defence and security expenditure, our chart this week looks at military spending around the world, which has reached $2.4trn.

Column chart Global military spending ICAEW chart of the week Column 1: NATO USA $916bn UK $75bn Rest of NATO $360bn Total $1,351bn Column 2: SCO and CSTO China $296bn Russia $109bn India and other $106bn Total $511bn Column 3: Rest of the world Other US allies $304bn Ukraine $65bn Other countries $212bn Total $581bn 25 April 2024. Chart by Martin Wheatcroft FCA. Design by Sunday. Source: SIPRI Military Expenditure Database. Excludes Cuba, North Korea, Syria and Yemen. © ICAEW 2024

Our chart this week is based on the latter, with SIPRI reporting that global military expenditure has increased to $2,443bn in 2023, a 6.8% increase after adjusting for currency movements. SIPRI’s numbers are based on publicly available information, which means that some countries may be spending even more on their militaries that are included in the database. SIPRI was unable to obtain numbers for military spending by Cuba, North Korea, Syria, Yemen, Turkmenistan, Uzbekistan, Somalia, Eritrea, Djibouti, and Laos.

Military spending is the news this week following the announcement by the UK government that it will commit to spending 2.5% of GDP on defence and security, the recent vote by the US Congress to provide $95bn in military aid to Ukraine ($61bn), Israel ($26bn) and Taiwan and others in the Indo-Pacific ($8bn), and the release of the Stockholm International Peace Research Institute (SIPRI) Military Expenditure Database for 2023.

More than half of that spending is incurred by NATO, with total military spending of $1,351bn, comprising $916bn by the US, $75bn by the UK and $360bn by other NATO members. Of the latter, $307bn was spent by the 23 members of the EU that are also members of NATO (including $67bn by Germany, $61bn by France, $36bn by Italy, $32bn by Poland and $24bn by Spain), while $53bn was spent by the other seven members (including $27bn by Canada and $16bn by Türkiye).

The Shanghai Cooperation Organisation (SCO) and the Collective Security Treaty Organisation (CSTO) are partially overlapping economic and military alliances convened by China and Russia respectively. China has the biggest military with $296bn spent in 2023, while Russia spent $109bn and other members spent $106bn (of which India spent $84bn).

We have categorised the rest of the world between other US allies which spent $304bn in 2023 (including $76bn by Saudi Arabia, $50bn by non-US members of the Rio Pact, $50bn by Japan, $48bn by South Korea, $32bn by Australia, $27bn by Israel and $17bn by Taiwan), Ukraine which spent $65bn, and $212bn spent by other countries for which SIPRI has data.

The numbers do not take account of the differences in purchasing power, particularly on salaries. That means China and India, for example, can employ many more soldiers, sailors and aircrew than NATO countries can for the same amount of money.

The Ukraine number also excludes $35bn in military spending funded by the US ($25bn) and other partners ($10bn) during 2023 that was not part of its national budget.

Global military spending is expected to increase further in 2024 as the international security situation deteriorates. This includes NATO members that plan to increase their defence and security spending to meet or exceed the 2% of GDP NATO minimum guideline set in 2014 to be achieved by 2024.

This includes the UK, which now plans to increase its spending on defence and security from 2.35% of GDP in 2023/24 to 2.5% of GDP by 2028/29, with suggestions from defence sources that setting a target of 3% of GDP may be necessary at some point in the next decade.

This chart was originally published by ICAEW.