Fears of Army cuts as falling pound hits defence budget

THE Armed Forces could face deep cuts because of a £700 million black hole in the Ministry of Defence’s budget caused by the falling value of the pound against the dollar.

The Royal United Services Institute (Rusi), a defence think tank, has warned that the cost of buying planes, helicopters and missiles from the US has increased after the Brexit vote.

Lord West, the former first sea lord, suggested that the number of Armed Forces personnel could have to be cut. He also warned that the falling pound represents the “perfect storm” and said he was “very worried” about future cutbacks, adding that Brexit had “caught everyone out”. The BBC quoted a government source saying that the development could push an “already stretched budget to breaking point”.

After the EU referendum, the pound slumped to its lowest level against the dollar in more than 30 years, making imports from the US more expensive.

Rusi’s Prof Trevor Taylor told BBC Radio 4’s The World at One that the extra costs of buying US equipment could amount to a £700 million annual shortfall. He said that Britain had already committed to buying 50 Apache aircraft and 138 F35 fighter jets as well as spares and support services for Chinooks and Trident missiles.

Lord West said he believed the £700 million estimate was correct. “What’s being created now in defence again is another huge black hole. We are in a pretty pickle, actually. There will be insufficient money to do the correct maintenance, to have the right numbers of people, and we are already seeing the impact that is already having on the Armed Services,” he said.

A Ministry of Defence spokesman said: “Like any responsible large organisation, we take appropriate financial precautions in all our procurement contracts.”