U.K. to Cut Defense Budget `Ruthlessly' After Priorities Review, Fox Says

Defense Secretary Liam Fox said the British government will act “ruthlessly and without sentiment” in cutting defense spending as it seeks to reduce its record budget deficit.

Setting out his priorities for the first review of the U.K.’s defense capabilities since 1998, Fox said the military will bear its share of cuts. He said the nation will become “stronger” by breaking from Cold War-legacy thinking and making its armed forces more relevant to current threats.

“Resources are tight for the country as a whole and defense is no exception; this review must be anchored in the art of the possible,” Fox told the Royal United Services Institute in London today. “We cannot insure against every imaginable risk, and so we need to decide which risks we are willing to meet and which risks we are willing to take.”

The Ministry of Defense won’t be able to afford as much as half of the equipment it is seeking to buy in the next decade, according to a report into procurement last year by Bernard Gray, a former government adviser. The U.K. defense review is due to be published in the fall.

“We face some difficult, delicate and politically charged decisions,” Fox said today. “There are competing priorities, risks to manage and budgets to balance.”

“We must act ruthlessly and without sentiment,” Fox said. “It is inevitable that there will be the perception of winners and losers as we go through this process. But defense as a whole will, and must, come out in a stronger position,” he said.

“It is crucial that the review avoids being merely a cost- cutting exercise,” Matthew Knowles, a spokesman for ADS, the group that represents U.K. aerospace, defense and security equipment makers, said in an e-mail. “The wealth-creating benefits of defense must also be considered in the review.”

To contact the reporter on this story: Kitty Donaldson in London at kdonaldson1@bloomberg.net.

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