Proposed increases in UK defence spending could deliver a £30billion annual boost to the economy by 2045, according to new analysis.
The report published by EY found that raising defence expenditure from 2.5% of gross domestic product (GDP) to between 3.5% and 5% by 2035 could generate “significant long-term benefits” for UK growth and productivity.
The big four professional services firm said this was largely due to the UK defence sector’s “relatively self-sufficient structure," with most spending remaining within the domestic economy.
Peter Arnold, UK chief economist at EY, said: “If spent appropriately, increased defence budgets provide a dual opportunity to bolster UK security and generate lasting economic benefits that support the government’s growth agenda.”
Prime Minister Sir Keir Starmer previously pledged to to spend 5% of GDP on “national security” by 2035 at a Nato summit last June, including 3.5% on "core defence".
However, the government is yet to outline how it will meet these targets.
EY estimates that reaching the 3.5% target would require an additional £31billion in real-terms spending by 2035, while hitting the 5% goal would need a further £77billion.
The proposed increase could in turn lift GDP by 0.8%, generating £30billion a year in additional economic output by 2045.
Read the full story in The Times.