Business

World military spending soars in spite of recession

US F-18 jet fighter
Military spending rose across the world last year

At a time when governments across the world have been borrowing heavily in order to spend, it seems the defence industry has benefited more than most.

Worldwide military expenditure reached $1,531bn (£1,040bn) last year, a 5.9% rise in real terms from 2008, according to Stockholm International Peace Research Institute (Sipri).

But growth in defence spending is not a new phenomenon.

Last year, while deficits ballooned in many countries, the world spent almost 50% more on arms and military operations than it did in 2000, Sipri's yearbook reveals.

Strategic choice

Rather than curbing spending on arms, it seems many governments have deemed it dangerous to risk job cuts in the defence sector at a time of recession.

"Many countries were increasing public spending generally in 2009, as a way of boosting demand to combat the recession," according to Sam Perlo-Freeman, head of the military expenditure project at Sipri.

"Although military spending wasn't usually a major part of the economic stimulus packages, it wasn't cut either."

"For major or intermediate powers such as the USA, China, Russia, India and Brazil, military spending represents a long-term strategic choice which they are willing to make even in hard economic times."

Smaller countries in central and eastern Europe, meanwhile, cut military spending in line with severe budget cuts across the board as they struggled to reduce their large deficits.

Big spenders

Canadian Leopard 2 tanks south-west of Kandahar City, 15 May 2010.
Military budgets might be reduced in the future

The US remains the biggest spender, accounting for some 54% of the total, having increased its military spending by $47bn in real terms, Sipri said.

Since 2000, the US has increased military spending by 63% in real terms, according to Sipri.

Other large countries, both developing and developed, also raised military spending last year, Sipri found.

But spending rose at a much faster rate in Asia and in islands in the Pacific Ocean, where the rate of growth was 8.4%.

And when measured as a proportion of GDP, military expenditure is greater in the Middle East than anywhere else in the world.

Looking ahead, the global aerospace and defence industry could find itself under pressure, however.

"The industry continues to be challenged by moderating defence budgets," according to Deloitte, a consultancy.

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