In response to the Spring Statement delivered to the House of Commons in the UK on 25.03.25. by Chancellor Rachel Reeves, I say:

Let’s not cut welfare to fund warfare!

I would hope that the immorality of cutting welfare spending in the UK is obvious and needs little explanation. I don’t buy the oft trailed assertion that this can be balanced (ethically and economically) by funding support to work programmes. It is disappointing, but sadly not surprising, that this is coming from a Labour Government.

Moreover, it seems to me that morality would demand that the UK, overall still a very rich country, increases its spending on welfare, public services and infrastructure, something you would hope a Labour Government would understand.

Nevertheless, in times of acute challenge governments have to make ‘tough decisions’. No one would suggest that we are not facing acute challenges but the precise nature of these challenges and the necessary responses to them should be more open to debate than is being allowed.

We are told that challenge no.1 is the direct military threat that Russia poses to Eastern, Western Europe and the UK. I have suggested elsewhere that any such threat is contingent on us continuing to provoke Russia, threatening regime change and dismemberment of the Federation. This would suggest that increasing military spending and creating larger armed forces would be a poor response, because:

– It is likely to be escalatory and provoke Russia into taking further military action.

– Even significant increases in military expenditure by Europe and the UK will fail to match the forces that Russia currently has in the field and thus be ineffectual.

– The recent track record of western armaments operating in Ukraine has been poor and there is a risk of more money being pumped into the production of failing equipment.

– With the exception of mercenaries and clandestine NATO personnel, European and UK forces have no experience of fighting a large-scale contemporary land war against a peer adversary.

Increasing military expenditure would, at worst, result in military defeat for Europe and the UK at the hands of Russia and run the risk of drawing the US directly into the conflict with all that goes with a face-off between two superpowers with atomic weapons.

At best, such an increase in military expenditure would be a colossal waste of money – money that could be better used meeting the needs of all the citizens of Europe and the UK and re booting their economies. Which brings us to challenge no.2 : The ongoing gradual collapse of the economies of Europe and the UK – which, unlike challenge  no.1, is very real.

A key current response to this, is ‘Military Keynesianism’ – to boost economies through military spending. This, so the rationale goes, would generate expanded defence industries, require the acquisition of raw materials, production of producer goods (machine tools etc) and create many skilled jobs. Admittedly there would be some multiplier effects here, generating an economic stimulus greater than the initial financial inputs, but the impact would be limited by the nature of the finished products.

Unless such industries are essentially export based (which once was, but no longer is, the case for Europe and especially the UK) their products’ value cannot be realized. Armaments, comprising massive amounts of capital, will either sit unused until obsolescence requires more modern replacements or, more worryingly, be destroyed in a war. This in itself drives escalation as any military knows that it needs to use its most modern weapons quickly – before they become outdated.

There are other problems with Europe and the UK adopting a Military Keynesianism approach:

– It takes a long time to rebuild arms industries, particularly within a wider context of general de industrialization. Where is the skilled workforce, the expertise required to develop new weapons and the cheap and accessible raw materials? In what seems like a head-long rush to rearm, the temptation will be to buy from already established industries – those based in the US. This will further limit the economic boost to the economies and create further difficulties with balances of trade.

– It will be extremely difficult to establish a new export market for these arms – the footage of burning Challenger 2 and Leopard 2 tanks in Ukraine or the low strike rate of Storm Shadow missiles does not provide very reassuring advertising. Moreover, the heavy equipment that Europe and the UK have historically excelled in producing is clearly obsolete. The current battlefield weapon of choice is the drone, many of which are cheap to adapt for military purposes – so even if the game was upped in this area there would be little mark-up on these products and why would a country buy another’s when they can make them easily themselves?

– The areas of warfare which do require huge capital injections are those of surveillance, monitoring, targeting and jamming. In the West the US has a virtual monopoly on all this (resulting in the other members of the Collective West being entirely dependent on it for the effective deployment of its equipment). Is Europe and the UK up for developing its own satellite infrastructure to support its own systems? Would the US allow such a challenge?

France, and Germany in particular, are planning to relax their fiscal rules to enable increased borrowing to fund re militarization. This would raise still higher the national debt to GDP ratios for these economies, stoke inflation and require a greater proportion of public finances to be used to pay off interest charges. It is interesting that The Kremlin, only too well aware of the long-term difficulties associated with a war economy, is as much focused on managing its future post war economy as it is progressing the war in Ukraine.

And then we have Rachel in the UK. Whilst commendable in her opposition to increasing the national debt, it seems to me that by funding increased military spending through public sector cuts the net result is pretty much a zero boost to the economy. So no growth dividend there, just a country where the poor and disabled are worse off and  …….  profits for arms manufacturers will increase.

Of course there are other, more sustainable ways to drive economic growth in ailing economies. However they all rest on increasing taxation – whether to pay for the increasing interest payments on government bonds (to already rich people), to my mind an expensively stupid idea or to choke off the excessive inflation that would eventually result from the Bank of England simply creating money at no charge to the country (a la Modern Monetary Theory). Whatever, I would obviously prefer such taxation to be progressive rather than regressive and to focus more on wealth than income.

So Rachel, let’s not cut welfare to fund warfare, let’s try to persuade your next door neighbour to do his best to avoid war, seek reconciliation with those currently portrayed as our enemies and grow the UK economy to the benefit of all, not just the rich.