Value for money: The case for 3% of GDP being spent on UK foreign policy by 2029/30
An incoming government after the next election should commit to the aspiration of raising spending on the UK’s international interests to 3% of Gross Domestic Product by the end of the next parliament (2029/30).
This modest commitment which would take UK spending on international interests from 2.64% of GDP in 2021-22 to 3% of GDP by 2029-30, would reflect the need to invest in the UK’s diplomatic, soft power, defence, intelligence, trade, and development capabilities after thirteen years of neglect. Since 2021/22, government spending on international facing departments have only gotten further away from the 3% of GDP aspiration.
This paper considers spending on the Foreign, Commonwealth, Development Office, the Ministry of Defence, the Single Intelligence Account, international trade policy (previously in the Department for International Development), the UK’s soft power, and Overseas Development Aid in other government departments, as part of the UK’s spending on international interests.
After 14 years of neglect and underfunding, as well as periods of sustained austerity, a sober review of the resources available to international facing departments in Whitehall reveals that there is a strong case for an incoming Government to commit to investing in the UK’s international capacity and standing abroad.
Not least, is this apparent, when reviewing the heavy demands an incoming Government will face to deal with multiple crises abroad, reaffirm and reconnect the UK’s standing with key partners and allies, maintain the UK’s national security, and to secure the UK’s prosperity and standards of living at a time when the global economy faces unprecedented challenges.
This aspiration would fit within the fiscal rules outlined by the Labour Party and could be offset to some degree from increased tax and national insurance receipts, the closure of tax relief loopholes and tax avoidance schemes, the equalisation of the tax treatment of Capital Gains Tax with Income Tax, recuperation of tax and national insurance receipts through increased expanding the headcount of the armed forces, diplomats, aid workers, trade negotiators, and intelligence security officers, and increased investment from the Ministry of Defence in the UK.