Johnson Vows $22 Billion for Defense to ‘Bolster’ U.K. Influence
40mm armament munitions sit on display at the Hanwha Defence Systems Corp. during the Defence & Security Equipment International exhibition at the ExCel Centre in London, U.K. (Photographer: Simon Dawson/Bloomberg)

Johnson Vows $22 Billion for Defense to ‘Bolster’ U.K. Influence

Boris Johnson will announce an extra 16.5 billion pounds ($22 billion) in defense spending over the next four years, as he tries to boost U.K. influence and counter growing threats from cyber and space warfare.

In a speech Thursday to mark the initial findings of a military and foreign policy review, the prime minister will lay out plans for an agency dedicated to artificial intelligence, the creation of a National Cyber Force and a new Space Command capable of launching its first rocket in 2022, his office said.

“The international situation is more perilous and more intensely competitive than at any time since the Cold War and Britain must be true to our history and stand alongside our allies,” Johnson will say, according extracts of the speech released by his office. “To achieve this we need to upgrade our capabilities across the board.”

But the timing is politically sensitive for Johnson as the coronavirus pandemic wreaks havoc on the U.K.’s public finances, pushing debt above 100% of gross domestic product for the first time since the early 1960s. The announcement also comes days before Chancellor of the Exchequer Rishi Sunak is due to announce a one-year spending review, having abandoned plans for it to cover three years due to uncertainty caused by the virus.

The multi-year settlement for the Department of Defense came after “robust” negotiations with the Treasury, a person familiar with the matter said. The Treasury has previously said multi-year plans for the National Health Service and schools will still be funded, as will priority infrastructure projects such as the HS2 high-speed rail line.

Defense Priority

“I have taken this decision in the teeth of the pandemic because the defense of the realm must come first,” Johnson will say. “This is our chance to end the era of retreat, transform our armed forces, bolster our global influence, unite and level up our country, pioneer new technology and defend our people and way of life.”

The government said the new funding comes on top of plans to increase spending by 0.5% above inflation, and means a total cash increase of 24.1 billion pounds. It’s the largest military investment in 30 years and keeps the U.K. as the second-biggest spender in the North Atlantic Treaty Organization after the U.S., Johnson’s office said in a statement.

The plans will also create 10,000 domestic jobs a year, according to the government, helping Johnson meet his pledge to “level up” deprived parts of Britain. Johnson, who discussed NATO on a call with U.S. President-elect Joe Biden last week, is also looking for ways to bolster the U.K.’s position after leaving the European Union.

While likely to be a boon for U.K. defense and aerospace companies, the spending will add to the budget deficit, which was forecast to be just 55 billion pounds in the current fiscal year and is now on course to exceed 400 billion pounds. As a share of the economy, that’s double the level reached after the financial crisis.

©2020 Bloomberg L.P.

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