Britain will rush ahead with fitting laser weapons on to warships as part of an additional £2.2 billion ($2.84 billion) for defence but at the cost of the overseas aid budget, the Chancellor Rachel Reeves announced on Wednesday.
Ms Reeves used her spring fiscal statement to pledge to “boost Britain’s defence industry and to make the UK a defence industrial superpower”.
She said the government will provide £2 billion of increased capacity “to provide loans for overseas buyers of UK defence goods and services, giving further opportunities for our world-leading defence companies to grow and create jobs here in Britain, as military spending rises right across Europe”.
That further investment in the country’s defences comes at a cost, however, as she set out how she intended to balance the books by cutting the welfare budget.
She blamed “increased global uncertainty” as the budget watchdog slashed its estimated economic growth.
The Office for Budget Responsibility (OBR) halved its forecast for growth in GDP in 2025 from 2 per cent to 1 per cent. Despite this, she said the OBR had upgraded its forecasts for subsequent years with GDP expected to increase by 1.9 per cent in 2026, 1.8 per cent in 2027, 1.7 per cent in 2027 and 1.8 per cent in 2029.
Shadow chancellor Mel Stride said the country is “weaker and poorer” as a result of Ms Reeves’s decisions.
Aid for lasers
Ahead of the statement, the Treasury disclosed that some extra military funding will come from the overseas development budget that was last month slashed from 0.5 to 0.3 per cent of GDP.
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Former Conservative development secretary Andrew Mitchell said he was “horrified” at the aid cuts and warned of a “belt of terrorism” that could stretch across sub-Saharan Africa as a result.
But the government believes the harsh cuts are necessary to ensure the UK can defend itself from the growing Russian threat and global conflict.
Part of Ms Reeves's proposed “decade of national renewal” for Britain will be putting advanced weaponry in the hands of its military.
The money will be invested in advanced technologies so that the country's armed forces “have the tools they need to compete and win in modern warfare”, the Treasury said. That included a guaranteed investment to fit Royal Navy warships with “directed energy weapons” by 2027.
The lasers can allegedly hit a £1 coin from 1km and take down drones at a range of 5km.
“Our task is to secure Britain’s future in a world that is changing before our eyes,” Ms Reeves said. “But we have to move quickly in a changing word and that starts with investment.”
The military’s money comes from the Treasury reserve and the cuts to the Overseas Development Assistance (ODA) budget, so will not require additional borrowing maintaining “the Chancellor’s ironclad fiscal rule”, her department said.
‘Belt of misery’
But that raid on overseas aid was described as a “such an error of judgment” by Mr Mitchell, with the cuts demonstrating the government had a “misunderstanding of the huge national interest benefit of overseas development”.
Alongside massive reductions in the US Agency for International Development, Britain’s cut will mean that the allies “vacate the territory”, which could be replaced by Russians or Chinese but also terrorist groups.
It could generate a “belt of misery” stretching from “the terrible things that have been happening in northern Nigeria” through the Central African Republic, Mali, across to Somalia and even Yemen, Mr Mitchell told the International Development Committee.
“A belt of misery where there are four or five different terrorist movements in operation,” he warned. “This whole thing will be a rich recruiting ground for terrorism.”
End of a superpower
The government had previously said it would wait for two years before introducing the overseas aid reduction, which Mr Mitchell said was a “harsh lesson” learnt from when the Conservatives introduced the first cut from 0.7 per cent three years ago.
But the Treasury briefing suggests the defence money will be taken immediately.
Mr Mitchell lamented that when Britain had stuck to the 0.7 per cent of GDP for ODA money, an internationally agreed figure, that made it a “development superpower”, assisting in “the fastest decline in international poverty in human history” that lasted from 1990 to 2020.
One way of lessening the blow would be to find “multipliers for money”, he suggested. “If, for example, we and the UAE or the Saudis agree together to pursue tackling starvation in Somalia and we each put in $25 million, then we are getting two for one for our taxpayers. There's quite a lot of that sort of thing that we should be doing.”
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
