The UK has missed out on a multitude of economic opportunities by limiting its defense budget, according to GlobalData. The leading data and analytics company notes that the UK has long used defense spending to stimulate the economy, creating jobs and fostering industry clusters in areas that are otherwise neglected by Westminster.

Madeline Wild, Associate Defense Analyst at GlobalData, comments: “The budget could have been used to support investment in domestic small-medium enterprises (SMEs), such as in 2019-2020 when £1.1 billion ($1.6 billion) was spent directly with SMEs while another £3.4 billion ($4.9 billion) reached them through the supply chain. UK defense SMEs are valued at £20 billion ($28.6 billion) annually, which highlights the impact that any extra funding could have on the national economy. Further, the benefits the UK budget could have offered local communities may have been a counterbalance to increased government spending.”

The lack of funds is also noteworthy, as the UK is just one of a shrinking number of European countries to have not announced increases due to the Russia-Ukraine crisis. For example, GlobalData estimates that Germany’s defense budget will reach a colossal $83.5 billion by 2024, a 45% increase on 2021’s $57.5 billion. Today’s announcement puts the UK at great contrast to its NATO and European allies.

Wild continues: “I am not overly surprised that spend wasn’t increased following the conflict. Budget discussions focused instead on high inflation rates and the unsustainable cost of living. While there would have been economic and geopolitical benefits to increasing the budget, the high inflation rates would have made it near impossible and caused intense financial strain.”