Sunday, June 26, 2011

UK military faces £10bn budget deficit

Source: Press TV

A big new black hole has emerged in the UK's defence budget, threatening more British troops, aircraft and warships, according to media reports.

Ministry of Defence (MoD) authorities estimated that the military would need at least £10 billion in the coming years to be able to endure consecutive wars and the unforeseen events, The Daily Telegraph reported.

The financial “mismatch” is larger than all the defence cuts announced in last year's Spending Review, the report said.

It has also triggered concerns of another round of painful reductions in the Armed Forces.

The MoD's budget, £33.8 billion this year, is being cut by 8 per cent over four years.

The department has concluded that those cuts will still not be enough to balance the budget, meaning that unless the Treasury increases defence spending to fill the gap, more cuts will be required.

The shortfall concerns the MoD's budget from 2015, but sources said that without a promise of more money now, ministers will soon have to start cutting and cancelling programmes due to be delivered later.

“We are quite close to the point where this will force us to make new cuts,” said a senior defence source.

The huge shortfall has emerged from an internal review of the MoD's financial liabilities over the next decade.

The “three month study” is due to conclude next week, but the precise level of the MoD's shortfall is still the subject of intense haggling between Whitehall departments.

James Arbuthnot, the chairman of the Commons defence committee this week suggested that the MoD was now seeking savings of £8 billion.

But MoD insiders said the new black hole is actually higher than that and likely to be “in the tens of billions”.

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