NIALL FERGUSON: Europeans are finally waking up from their defenceless fool’s paradise… but it could be too late to stop the ultimate nightmare

‘Halfway up Wimbledon High Street… there was the blackened shell of a Panzer IV, a monument to some unknown youth who — with a Worthington beer bottle, filled from the service station at the top of the hill, and a box of Swan Vesta matches — passed into legend, and into songs that were sometimes crooned softly where no German ears listened.’

Len Deighton, SS-GB (1978)

Losing a war on your own soil is the ultimate nightmare. It is a nightmare England has been spared for nearly ten centuries. But we had a close call in 1940. That was why, when Len Deighton’s thriller SS-GB — set in a Britain occupied by Nazi Germany — was published in 1978, it made so many shudder.

Britain avoided defeat in 1940 because enough of our soldiers were rescued from Dunkirk, and enough had been done to prepare our air force for the Battle of Britain.

Defence spending had essentially flatlined from 1923 until 1933. But between then — the year Adolf Hitler came to power in Germany — and 1938 it rose by a factor of four.

Relative to gross domestic product (GDP), it rose from 2.6 per cent to 7.4 per cent.

We have come long way since VE-Day 1945 — mostly, but not always, downhill. There is still much to be proud of. Today, Britain’s armed services continue to punch above our economic weight compared with most European countries.

In cash terms, we have the largest defence budget in Europe — £52 billion this year, ahead of France and Germany.

Last year it was equivalent to 2.1 per cent of GDP, making the UK one of only 11 members of Nato spending more than 2 per cent.

Destroyers filled with British troops evacuated from Dunkirk in 1940

Aircraft carrier HMS Prince of Wales is playing a lead role in Nato exercises

Aircraft carrier HMS Prince of Wales is playing a lead role in Nato exercises

British soldiers, sailors and airman are active in multiple conflict zones around the world.

The Army has trained more than 60,000 Ukrainian troops in the past ten years.

The Royal Air Force has joined in American-led attacks on the Houthi rebels in Yemen, whose missiles and drones have chased so much merchant shipping out of the Red Sea.

The Royal Navy’s aircraft carrier HMS Prince of Wales is currently playing a leading role in the Nato exercise Steadfast Defender, the alliance’s biggest military exercise since the Cold War.

All this is taking place two years after the Russian invasion of Ukraine, five months after Hamas’s attack on Israel and perhaps on the eve of a US-China showdown over Taiwan.

In a speech at Chatham House last week, the chief of the Defence Staff, Admiral Sir Tony Radakin, tried to look on the bright side.

‘We are not on the cusp of war with Russia,’ he declared, reassuringly. ‘We are not about to be invaded. No one in the Ministry of Defence is talking about conscription… Britain is safe… We are safe because we are part of Nato, the world’s largest and strongest alliance and also because we are a responsible nuclear power.’

If Britain truly is safe, however, it is despite a remarkable deterioration in the state of our defence.

The Navy has been embarrassed multiple times this year already. Our lead aircraft carrier, HMS Queen Elizabeth, had to withdraw from Steadfast (to be replaced at the last minute by HMS Prince of Wales) after problems with a propeller shaft. 

A Trident nuclear missile crashed shortly after being launched from the submarine HMS Vanguard during an exercise in January (the MoD blamed ‘an anomaly of the testing regime’.)

In Bahrain in January, two minesweepers — HMS Chiddingfold and HMS Bangor — collided in broad daylight.

The former First Sea Lord and Chief of the Naval Staff, Admiral Lord West, is not alone in believing that ‘chronic underfunding over many years has impacted on the strength and capability of the Royal Navy’’.

True, the Navy should start taking delivery of the first of its new Type-31 frigates in 2027, as well as a new nuclear attack submarine. But two Type-23 frigates are to be retired, cutting our frigate fleet to just nine ships.

Meanwhile, General Sir Patrick Sanders, the Chief of the General Staff, has warned that underfunding threatens ‘inadvertently’ to reduce the Army to a ‘domestically focused land force’.

And the harsh truth is that it has been already reduced as drastically as if the weight-loss drug Ozempic had been mixed in with the rations.

Back in 2021 the then defence secretary, Ben Wallace, announced a 10,000 shrinkage in the size of the Army, taking it down to 72,500 by 2025. With recruitment in the doldrums, that target may be overshot. A 70,000-person army can barely muster a single heavy division.

True, an upgraded tank is on the way, the Challenger 3, but there will be just 148 of them. Poland will have ten times that many modern tanks.

And matters are not helped by procurement fiascos including abandonment of a key strand of the £3.2billion Morpheus programme — which aims to deliver the next generation of tactical communication and information systems — and the bone-rattling Ajax armoured fighting vehicle which has been subject to repeated technical difficulties and delays.

As for the RAF, it’s downright anorexic. We had 31 jet squadrons at the end of the 1980s. We may soon be down to seven.

And yet, the MoD could still find £1.75million to spend on a four-year diversity, equity and inclusion programme for the air force.

A part of the military funding problem is the cost of our not-quite-independent-nuclear deterrent (which in fact relies heavily on U.S. support). Nukes account for a fifth of the total defence budget and a third of the planned equipment budget for the next ten years. As The Economist has pointed out, strip out the nuclear weapons, and the true UK defence budget is closer to 1.75 per cent of GDP.

Yet Vladimir Putin’s nuclear sabre-rattling makes it clear that we still need a nuclear deterrent. Earlier this week it emerged that the Russians have plans to use tactical nuclear weapons in the event of a war with a major power, according to leaked military files dating back to 2008-2014.

Since February 2022, Putin has regularly threatened to use such weapons if Western Europe ‘escalates’ its support for Ukraine — and did so again in a major speech on Thursday. ‘Screw them, you know, as people say,’ he has charmingly remarked.

Almost as alarming to Britain’s defence establishment is former (and perhaps future) President Trump’s claim at a recent rally in South Carolina about what he might say to a Nato ally spending less than 2 per cent of GDP on defence: ‘You’re delinquent? No, I would not protect you. In fact, I would encourage them [by implication the Russians] to do whatever the hell they want.’

Yet the broader problem is that we cannot easily afford to increase our defence budget. For while defence spending has been going down, spending on all kinds of civilian programmes has been going up. The entire Western world has been living in a fool’s paradise, imagining that the post-Cold War era would never end. We have been living in the age of butter not guns, ploughshares not swords.

Christoph Trebesch of the Kiel Institute for the World Economy has tracked the secular shift away from defence spending towards spending on health, labour, welfare, social and educational programmes, as well as non-military public-sector pensions.

Prior to World War I, the countries that today belong to the G7 devoted on average around a third of their central-government budgets to defence, and less than 5 per cent to non-military social programmes.

The world wars caused military expenditures to soar, but did not prevent a sustained upward trend in social expenditures. After the Korean War (1950-53), defence spending began an almost mirror-image decline.

Today, social expenditures are on average above 40 per cent of central government spending. Defence is down below 10 per cent.

Expressed as shares of GDP, the G7 countries now spend above 10 per cent of GDP on social programmess, and a little over 3 per cent of GDP on defence, with the U.S. spending the largest share. Since 2006, various social programmes in the UK have accounted for more than half of government spending and 20 per cent of GDP.

The reversal in central government priorities is especially striking for Germany. In the 1950s and 1960s, German defence spending averaged 3.8 per cent. Last year, according to the latest Nato estimates, the German defence budget was equivalent to 1.57 per cent of GDP — two-fifths of the U.S. figure of 3.49 per cent. More than two thirds of total Nato spending — a staggering 68 per cent — is now done by the U.S. No wonder Trump blusters. He has a point.

By the standards of the Cold War, most Nato countries have disarmed themselves to an astonishing extent. They have in effect imposed the kind of demilitarisation on themselves that was forced on Germany by the Treaty of Versailles in 1919.

There are other asymmetries within the alliance. If we look at effective aid to Ukraine, as opposed to commitments, we see that support is highly skewed, with the Baltic states, Poland, and Scandinavia doing much more than most relative to their resources.

Moreover, in a number of cases there is an additional problem. Exploding public debts since the global financial crisis and the pandemic, followed by the inflation and higher interest rates of 2022-23, have created an additional and irresistible competitor for taxpayers’ money: the costs of debt service.

What I call Ferguson’s Law states that when a great power is spending more on interest payments than on defence it is in trouble. (True of Spain in the 17th century, France in the 18th, the Ottomans in the 19th, and Britain in the late 20th.)

The United States is now perilously close to that predicament. The UK has been in it for all but one the past ten years. Indeed, last year’s interest payments were precisely double the defence budget (£108 billion to £54 billion).

This was not the case in the 1930s, when rearmament was imperative to avoid the nightmare of defeat at Hitler’s hands and the cost of debt service was falling.

For years Europe kept on disarming even as geopolitical storm clouds gathered. However, the interruption of U.S. support to Ukraine — almost a year before the presidential election everyone dreads — does seem to have woken Europeans up. The good news is that, at the Munich Security Conference last month, I saw signs of change.

This year, European defence spending is finally going up. And even German politicians are beginning to grasp that rearmament might be both prudent from the point of view of national security and economically beneficial to the country’s ailing manufacturing sector. (Guess what? Germans are pretty good at making weapons! Who knew?)

On top of these national efforts, the European Commission looks likely to launch a €100billion defence fund to boost armaments production.

In a recent interview, the German Defence Minister, Boris Pistorius, pledged that Europe would soon be producing more artillery shells than the U.S. After long years of torpor, output at Rheinmetall, the German arms manufacturer, is already surging. And there are promising signs of a lively new defence-technology sector, stimulated by the advances in drone warfare we have witnessed in Ukraine.

Yet there is a very long way to go before European ‘strategic autonomy’ — a favourite phrase of French President Emmanuel Macron — can become a reality. And the indignant German reactions last week when Macron had the temerity to suggest that European troops might needed in Ukraine spoke volumes.

Ukrainian soldiers on a routine training exercise

Ukrainian soldiers on a routine training exercise

Such a drastic step should not be necessary if a united Nato can maintain its commitment to arming and aiding Ukraine. Unfortunately, that is now a very big ‘if’, contingent on the wheeling and dealing within the U.S. House of Representatives, to say nothing of what Trump may say on the campaign trail—and do if he is re-elected.

The mood amongst Ukrainian troops who serve at the front line is bleak, as you might expect with ammunition being rationed and the Russians advancing into Avdiivka and beyond.

In Munich, Yuliia Paieveska — a Ukrainian paramedic taken prisoner after the siege of Mariupol — described with unforgettable, coruscating words the physical and psychological torture inflicted by her Russian captors. She required six surgical procedures after her return to Ukraine.

‘We are the dogs of war,’ she said, in one of the most electrifying speeches I have ever heard. She had seen ‘streams of blood’ in her work at the front line. The war was like ‘a monster’, with an insatiable appetite for blood. Only by giving Ukraine the weapons to kill the monster could the West get this war to stop.

The West plainly doesn’t want Ukraine to lose — to suffer the humiliation Len Deighton imagined if Britain had been overrun in 1941. But does it want Ukraine to win?

Does it want Yuliia, and so many other victims of Russian brutality, to be avenged? Does it want to see Putin defeated — without which there can be no real security for Europe?

I wish I felt more certain that the answers to those questions were ‘yes’.

Niall Ferguson is the Milbank Family Senior Fellow at the Hoover Institution, Stanford, and a columnist for Bloomberg Opinion.