Why is the target defence budget always set as a percentage of GDP.
If it costs a £100 billions to defend the nation does it matter whether that is 1% of £10trillion or 3% of £3trillion.
Two arguments:
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Spending will expand to whatever number the budget provides. If the last study says 100B is enough, and somehnot only the UK.ow the government offers the military 200B, all 200B will get spent. Ditto 400B or 800B or 1.6T. The idea it is possible to define an exact number less than infinity that somehow is guaranteed to defend the country from all threats is simply nutty. That calculation is impossible.
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Budgets are about priorities. For a fixed total revenue, if e.g. defence gets more than 3%, something else gets less. There are lots of ways to argue that all that other stuff should get more.
This is true in every country, not only the UK.
It’s similar to tipping on a restaurant meal. It makes no sense that I should tip a larger sum to a server who served me a $100 gourmet steak than a $20 steak. But somehow society just made it a system that stuck out of convenience shorthand. I believe that with defense spending for GDP %, it’s meant as some sort of flawed-psychology measure to show “seriousness” and what a government prioritizes. Like, if you spend 3% of GDP on defense you are considered to be serious, and if only 1%, you’re not.
Because there is no cost to defend a nation. Defense is something that scales. If you have a little money, you get a little bit of defense. The more you spend, the more you get. As a practical matter, there is no top number where all you need to spend is that and you get everything you need. That number far exceeds the GDP of every nation on Earth.
Any study that says you only need X has a LOT of assumptions built into it, and doesn’t reflect the reality of defending a nation.
So defense spending is always about how much can you afford, not how much it costs. And what you can afford depends on a percentage of your GDP.
Once you figure out how much you can afford, you then need to figure out the best way to spend it, but that’s a different subject altogether.
I’m trying to parse what you are saying here, and my best guess is that you mean, “There is no defined cost to defend a nation.” Is that correct?
Basically, yes. The OP said it costs X to defend a nation, but that’s not how defense works. There is no defined cost where that is all that you have to spend and you get all of the defense that you will ever need. The value of X in that case is greater than the GDP of all nations combined.
Every nation has to figure out how much they can afford to spend on defense, and then they have to figure out how best to spend that amount to get the best defense possible for their budget.
Countries have ceased to exist when they get that calculation wrong.
A common wisdom in the motorcycling community is “Buy as much helmet as you can afford”. I’m sure there are similar things said in the home security, insurance, health care, and other sectors. This, of course, is a bonanza for the people who sell this stuff.
It is kind of that. Rich countries pay more for defense because they can pay more for defense. The “precent of gdp” number is basically, “as much as you can afford”.
There’s no real “risk of being invaded” target. All else being equal, poor countries will have a higher risk of being invaded than rich ones.
Fight my ignorance, is this a thing outside of NATO (or other international alliances?) I thought it was just a simple way of accounting for differences in economic output of member countries.
I think what triggered this thread is our former Defence Minister insisting we need to spend 3%, and resigning about it as a “point of honour” then bailing on it as soon as he became Chancellor (Treasury Secretary)
Yep. The Brits in particular have been using percent of GDP as a benchmark for decades. With not too much regard for whether the money is spent effectively.
Separately, NATO has had a goal for ~20 years to get everyone spending 3% of GDP on defense. Except for the US, which greatly exceeds 3%, nobody does. The Russian invasion of Ukraine has concentrated minds nicely and several NATO countries are ramping their spending about as fast as can be done without crazy levels of waste and inefficiency.
Like, he resigned in protest because the defense budget wasn’t 3% of GDP and then when he was in a position to do something about it he suddenly lost his principles?
Yes. Realistically the money would need to come from our extremely bloated welfare system, where there is plenty of fat to cut, but our new PM is addicted to keeping it high so our new Chancellor has gone back on the point of honour that was so important about a month ago.
Do you suppose this “fat” is in the administration of the programs, or in the benefits paid out?
I would bet that the actual budgetary guidelines/goals are set as a percentage of tax revenue, not GDP.
Percentage of GDP is a way to compare apples to apples on the international stage, by normalizing the GDP to some common currency and then evaluating how much defense spending there is between countries as a percentage of GDP. It sort of evens out economically powerful vs. weak countries and gives you an indication of what priority they put on defense relative to other things.
For example, the US spends a colossal amount of money on defense, but relative to the size of the economy, we are not a particularly large spender at 3.1% of GDP. We’re below other developed countries like Denmark (3.3%), Norway (3.3%), and Israel (7.8%).
Only if 0.1% is “Greatly”. The confounding factor is that the US GDP is SO big relative to everyone else’s, at 32.4 trillion dollars, with China at #2 with 20 trillion, and Germany in third place with 5 trillion.
If we spent 1% of GDP on defense, we’d still be spending 324 billion dollars, which would put us slightly behind China, but still almost twice Russia’s (#3) spending, and nearly 3x Germany’s (#4).
List of countries with highest military expenditures - Wikipedia
Also, defense spending numbers can be manipulated by politicians as need be to suit the public’s ears. When the public wants more defense spending, then things like veterans pensions, healthcare, etc. can be included in the figures to make it seem like the nation is spending more. When the public wants less, those things can be excluded as not “true military” spending to look like less.
2%. That was the official goal between 2014 and 2025 (to be achieved by 2024 for those not yet there in 2014). In 2025 it was upped to 5% for everyone but Spain who were granted an exemption (to be achieved by 2035).
Previous to that 2% was an unofficial goal.
During WW2 allied nations were spending about 40% of GDP on military. I think Japan was spending 60% of GDP on military.
Ukraine is currently spending 40% of GDP on military. Russia is spending 7-8%. But because Russia’s economy is larger, in real dollar terms Russia is spending over double what Ukraine is spending.
How much you spend is based on how much you need to spend to deal with threats and achieve your goals. That may be 2% of GDP, it may be 60%.
But to answer your question as to why its a % of GDP vs a dollar figure, I don’t know. North Korea spends 25% of GDP on military while South Korea spends 3%. but because South Korea is far richer and more technologically advanced, South Korea would destroy the North Korean military.
At least some of what a military buys is inherently priced in local currency. An obvious example is that an NK soldier earns less than a SK soldier. So the extra SK spending of that difference in wages doesn’t buy any more soldiers.
Of course some of what a military buys is sold on the sorta-open word market. The price of an 155mm artillery shell for US cannons is (made up example) $1000. Whether you’re UK, France, Japan, or Zimbabwe, if you want to buy a dozen you need to come up w USD12K. Which might be a much bigger lift for Zimbabwe than Japan.
It really only gives you a sense of relative priority. The North Koreans prioritize their military quite a bit, while the South Koreans do not, as shown by the % of GDP allocated to military spending.
But like you point out, the actual monetary values differ dramatically. As do things like culture, training, etc.