What if the British government commits to increasing defence spending to 3.5% of GDP by 2030, or 4.0% by 2035?
Bronze award winner for the First Sea Lord’s Essay Competition 2025
This piece was written in April 2025 for the First Sea Lord’s Essay Competition, and was awarded Bronze at the International Sea Power Conference 2025.
An increase in defence spending to 3.5% or 4% of the United Kingdom’s (UK) Gross Domestic Product (GDP) would require a radical realignment of fiscal priorities for His Majesty’s (HM) Government, whether funded through higher taxes, heavy borrowing or a significant reduction in other departmental budgets. The only situation in which this might occur would be an unprecedented change to the geopolitical environment – most likely a complete or near-complete withdrawal of the United States (US) from the North Atlantic Treaty Organisation (NATO).
If the US downscaled its offer to NATO and other regions, the Royal Navy would likely be required to increase its commitments, especially within the Euro-Atlantic and the Middle East. Understanding the context in which a defence spending increase would occur is important for discussing the consequent implications.
It should be noted that GDP percentages are a poor way to determine defence investment. Britain has historically spent defence budgets inefficiently, best seen in comparisons with France, which possesses nuclear weapons, a larger army and roughly similar capabilities with a defence budget amounting to 79% of the UK’s in 2024. While more money is required, it must also be spent more efficiently. Nevertheless, greater funds are obviously a precondition for improvement, and would give the Ministry of Defence (MOD) a greater ability to prepare to fight both today and in the future.
How might HM Government use such an increase, especially regarding the Royal Navy? Considering the scenario, the overarching aim would be to replace partly the US’ role in NATO and European security. This in turn would require rebuilding the foundations on which the British defence enterprise is built to enable a broad expansion of capacity. Shoring up the less glamorous elements of military power would be far more valuable than simply pouring budgets into more frontline assets. The classic ‘Workforce, Equipment, Training, Sustainment’ (WETS) format is a useful model for considering this.
First, workforce. The British Armed Forces do not have enough people to fulfil current requirements, and certainly not enough for a scenario in which commitments greatly expand. The Royal Navy is no exception to this, and naval personnel are still leaving at a faster rate than they are replaced. While new technology will help to compensate for this somewhat, there is no evidence from past or current conflicts that it will negate the need for a larger workforce. Indeed, multiple reports note the critical need for manpower on both sides of Russia’s full-scale invasion of Ukraine. Spending unlocked funds on solving problems of recruitment and retention – including the uplift of the defence housing estate – and increasing the number of sailors available to the force (including reservists) will be key to bolstering the Royal Navy’s fighting power.
Second, equipment. The highest priority – especially if a decline in American commitment was the key driver in greater defence spending – would be the development of strategic and integrated assets. Developing the digital backbone of the MOD would be critical in ensuring that communication becomes less stovepiped, new technologies could be adapted effectively and the British Armed Forces can fight considerably more efficiently.
Similarly, developing the UK’s space assets would be a priority, especially for communication and Intelligence, Surveillance and Reconnaissance (ISR) capabilities; the criticality of these capabilities extends to the maritime as much as it does to the other domains. Fundamentally, if the basic digital and data structures are not sound, the Royal Navy will not be able to exploit the benefits of Artificial Intelligence (AI) and other novel technologies, nor will it be able to operate as part of the ‘Integrated Force’ alongside the other services.
Once funding has been secured for the adoption of emerging technologies, ship procurement can then be tackled. Although British shipyards are expanding, vessels still take time to procure, and it is unlikely that the Royal Navy would receive a major uplift in conventional advanced warships in the short term. Industrial capacity will also be discussed further down, but if a quick increase in hulls was needed, the additional funds could be spent on novel sovereign solutions or by purchasing from abroad. The former option would include procuring uncrewed vessels and aerial drones by drawing on the strengths of the UK’s Small and Medium Enterprise (SME) economy. In particular, a greater number of Anti-Submarine Warfare (ASW) assets would be required, as Britain could no longer rely on the support of the US Navy in a contest against the Russian Northern Fleet or to defend its nuclear deterrent.
Alternatively, ships could be procured from allies such as South Korea or Japan, which both have significant shipbuilding industries – producing approximately 29% and 13% respectively of ships built in 2024. This could include sustainment ships and more Offshore Patrol Vessels (OPVs) or fast attack craft, which would free advanced surface escorts for conventional warfare while retaining presence in areas of interest, most notably the Red Sea, Persian Gulf and Indian Ocean.
Training is an often-overlooked factor. Significant funding should be apportioned to enable rigorous and realistic training of naval personnel. While synthetic training can assist at a lower cost, nothing matches the effectiveness of live exercises. Greater live-fire practice, experimental training and formation-level (e.g., carrier battle group) exercises would ensure that the Royal Navy retains its position in employing the world’s foremost fighting sailors. Greater training for reservists should also be emphasised to mould a capable second echelon, as well as joint exercises with other arms to strengthen the Integrated Force.
Finally, none of this can occur without effective sustainment. At a tactical and operational level, ensuring ready availability of logistics for both the fleet and the Commando Force will be a pressing requirement, through the procurement of support ships and the stockpiling of consumables, such as munitions, spare parts and fuel. At a strategic level, heavy investment is required to ensure the reliable procurement and production of munitions and equipment at scale. Economically, even greater investment in the UK’s shipyard capacity could have a long-term positive impact on the Royal Navy’s ability to facilitate growth, especially if funding was unlocked to 4% of GDP by 2035.
A significant increase in spending to 3.5% or 4% of GDP would come with a commensurate increase in responsibilities. The Royal Navy could expand and modernise, but would also be expected to carry a far greater burden of European and global security. ‘Getting the basics right’ will be central to ensuring that the Royal Navy is ready to meet the challenges of a more dangerous world.
Matthew Palmer is a former British Army Officer, the Sir John Moore Adjunct Fellow at the Council of Geostrategy and a Richmond Fellow of the Royal Navy Strategic Studies Centre. He also writes in a personal capacity at Cracking Defence.
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Another brilliant piece. I am calling for 5% by 2030, ambitious but when one starts to understand this changing world, entirely necessary!
It needs ramping up to 5% ASAP.