1 00:00:02,680 --> 00:00:07,200 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:13,720 --> 00:00:17,599 Speaker 2: We have reports of Russian troops and tanks crossing the 3 00:00:17,640 --> 00:00:19,040 Speaker 2: border from several. 4 00:00:18,720 --> 00:00:22,439 Speaker 3: Locations from Crimea, occupied Crimea and to the rest of Ukraine. 5 00:00:24,600 --> 00:00:28,600 Speaker 4: The circumstances require firm and immediate actions from US. 6 00:00:28,880 --> 00:00:31,600 Speaker 5: I decided to conduct a special military operation. 7 00:00:32,080 --> 00:00:33,880 Speaker 6: This is as dangerous as it gets. 8 00:00:34,000 --> 00:00:36,440 Speaker 2: This is the most dangerous moment in Europe since the 9 00:00:36,520 --> 00:00:38,440 Speaker 2: end of the Second World War. The only thing that 10 00:00:38,640 --> 00:00:40,880 Speaker 2: Vladimir Putin understands is power. 11 00:00:41,040 --> 00:00:43,520 Speaker 5: You show any kind of a weakness and he will 12 00:00:43,520 --> 00:00:44,800 Speaker 5: basically go after you. 13 00:00:45,440 --> 00:00:49,000 Speaker 7: One of the presidents of a big country stood up said, well, sir, 14 00:00:49,479 --> 00:00:52,640 Speaker 7: if we don't pay and we're attacked by Russia, will 15 00:00:52,680 --> 00:00:53,400 Speaker 7: you protect us? 16 00:00:53,479 --> 00:00:55,360 Speaker 6: I said no, I would not protect you. 17 00:00:55,480 --> 00:00:57,920 Speaker 1: In fact, I would encourage them to do whatever the 18 00:00:58,040 --> 00:01:00,840 Speaker 1: hell they want. You gotta pay, pay your bills. 19 00:01:01,920 --> 00:01:04,959 Speaker 6: You have nice aution and don't feel now, but you 20 00:01:05,000 --> 00:01:07,040 Speaker 6: will feel it in the future. 21 00:01:07,200 --> 00:01:09,800 Speaker 7: You don't have the cards right now with us, you 22 00:01:09,880 --> 00:01:16,640 Speaker 7: start having right now. 23 00:01:15,600 --> 00:01:19,760 Speaker 5: Moments like this. In our past, Britain has stood up 24 00:01:19,920 --> 00:01:23,240 Speaker 5: to be counted. It has come together and it has 25 00:01:23,360 --> 00:01:26,960 Speaker 5: demonstrated strength, and that is what the security of this 26 00:01:27,080 --> 00:01:30,959 Speaker 5: country needs now and it is what this government will deliver. 27 00:01:37,240 --> 00:01:40,600 Speaker 8: Russia's war in Ukraine was a defining moment for Europe. 28 00:01:40,880 --> 00:01:45,160 Speaker 8: So was President Trump backing away from the US's international role. 29 00:01:45,920 --> 00:01:50,080 Speaker 8: Welcome to this special podcast on Britain's defense industry. I'm 30 00:01:50,160 --> 00:01:53,520 Speaker 8: Caroline HEPKEA. We know the threats are growing and the 31 00:01:53,560 --> 00:01:57,920 Speaker 8: world is rearming. All NATO countries increase spending on defense 32 00:01:58,040 --> 00:02:01,840 Speaker 8: last year, and more is coming. The UK government has 33 00:02:01,880 --> 00:02:05,960 Speaker 8: promised the largest sustained increase since the Cold War in 34 00:02:06,040 --> 00:02:10,520 Speaker 8: defense spending as part of the Strategic Defense Review. The 35 00:02:10,600 --> 00:02:13,800 Speaker 8: government wants to get the military to a position of 36 00:02:13,919 --> 00:02:17,640 Speaker 8: war fighting readiness. Here's the Prime Minister kissed Armer. 37 00:02:18,400 --> 00:02:21,440 Speaker 5: When we are being directly threatened by states with advanced 38 00:02:21,480 --> 00:02:26,239 Speaker 5: military forces, the most effective way to deter them is 39 00:02:26,400 --> 00:02:31,280 Speaker 5: to be ready and frankly, to show them that we're 40 00:02:31,280 --> 00:02:34,560 Speaker 5: ready to deliver peace through strength. 41 00:02:35,600 --> 00:02:39,160 Speaker 8: But the Prime Minister's target of spending three percent of 42 00:02:39,200 --> 00:02:43,440 Speaker 8: Britain's GDP on defense in the next parliament remains fluid. 43 00:02:44,080 --> 00:02:47,480 Speaker 8: NATO members are discussing an even bigger goal, and the 44 00:02:47,600 --> 00:02:51,200 Speaker 8: UK's preliminary deal to work with the EU and get 45 00:02:51,360 --> 00:02:55,240 Speaker 8: UK defense companies access to the EU's one hundred and 46 00:02:55,240 --> 00:03:00,200 Speaker 8: fifty billion euro security fund is still subject to negotiation, 47 00:03:00,760 --> 00:03:05,280 Speaker 8: the defense base is suddenly moving fast. On this podcast, 48 00:03:05,320 --> 00:03:09,840 Speaker 8: we'll discuss how serious Britain is about rearmament, where the 49 00:03:09,880 --> 00:03:13,440 Speaker 8: industry is ready to scale up with three of Britain's 50 00:03:13,520 --> 00:03:17,440 Speaker 8: largest defense contractors, and I'll also be joined by Bloomberg's 51 00:03:17,440 --> 00:03:21,080 Speaker 8: Ellen Milligan, who covers UK foreign policy and defense and 52 00:03:21,120 --> 00:03:25,760 Speaker 8: whom I've collaborated with on this story, and alongside Bloomberg's 53 00:03:25,840 --> 00:03:29,959 Speaker 8: chief UK economist Dan Hanson with his analysis about how 54 00:03:30,040 --> 00:03:34,000 Speaker 8: feasible a surgeon defense spending really is. But before that, 55 00:03:34,440 --> 00:03:38,000 Speaker 8: what are the main challenges for industry today compared to 56 00:03:38,040 --> 00:03:39,600 Speaker 8: the conflicts of the past. 57 00:03:41,120 --> 00:03:44,360 Speaker 6: Inspired by the leadership of mister Churchill, our war factories 58 00:03:44,400 --> 00:03:46,760 Speaker 6: work day and night in a desperate effort to re 59 00:03:46,800 --> 00:03:49,680 Speaker 6: equip our parties before the impending invasion was lunched. 60 00:03:50,320 --> 00:03:52,480 Speaker 2: We all know the story of those days. 61 00:03:52,680 --> 00:03:57,040 Speaker 8: Wartime spending in Britain peaked in nineteen forty five at 62 00:03:57,080 --> 00:04:01,440 Speaker 8: more than half of all economic outputs. By nineteen fifty 63 00:04:01,480 --> 00:04:04,960 Speaker 8: three it was still eleven percent of GDP, but over 64 00:04:05,000 --> 00:04:09,440 Speaker 8: the decades that spending has plunged with brief peaks around 65 00:04:09,480 --> 00:04:14,160 Speaker 8: the Falklands, War, Iraq and Afghanistan. Now there are efforts 66 00:04:14,240 --> 00:04:19,360 Speaker 8: to revive Britain's military industrial base and to produce more 67 00:04:19,520 --> 00:04:21,320 Speaker 8: home grown weapons. 68 00:04:23,279 --> 00:04:26,320 Speaker 3: So you're going to go into the forge area. 69 00:04:26,480 --> 00:04:29,440 Speaker 7: It's all done at eleven hundred degree sea, so obviously 70 00:04:29,600 --> 00:04:30,800 Speaker 7: is red hot material. 71 00:04:31,480 --> 00:04:34,279 Speaker 8: They make all sorts of shells here at the BA 72 00:04:34,320 --> 00:04:39,120 Speaker 8: Systems factory in Washington in the northeast of England, including 73 00:04:39,160 --> 00:04:42,320 Speaker 8: these one five to five millimeter shells which are just 74 00:04:42,360 --> 00:04:44,719 Speaker 8: about almost a meter long, look like a bit of 75 00:04:44,720 --> 00:04:47,039 Speaker 8: a tin can or a kind of a water bottle 76 00:04:47,320 --> 00:04:51,679 Speaker 8: that then gets filled with explosives and a propellant. BA 77 00:04:51,760 --> 00:04:56,479 Speaker 8: Systems is Britain's largest defense contractor. Steve Cardu has helped 78 00:04:56,480 --> 00:04:58,200 Speaker 8: develop the business. 79 00:04:58,440 --> 00:05:01,760 Speaker 7: We are expanding our one five to five capacity by 80 00:05:01,839 --> 00:05:05,880 Speaker 7: sixty polled, so that's a combination of some additional machining 81 00:05:05,920 --> 00:05:09,440 Speaker 7: lines here at Washington on the northeast and then the 82 00:05:09,480 --> 00:05:14,159 Speaker 7: brand new explosive filling and packing facility at GLASGOWYDE. And 83 00:05:14,240 --> 00:05:16,120 Speaker 7: the real focus to us really is how do we 84 00:05:16,520 --> 00:05:21,200 Speaker 7: expand our UK redition's capacity and also how do we 85 00:05:21,279 --> 00:05:24,880 Speaker 7: generate resilience in our industrial base and also our supply chaw. 86 00:05:25,440 --> 00:05:27,560 Speaker 8: How prepared are you? 87 00:05:27,720 --> 00:05:30,360 Speaker 7: How ready I you know the preparation that we're doing 88 00:05:30,400 --> 00:05:34,600 Speaker 7: around our upscaling of of our production capability, the underpinning 89 00:05:34,640 --> 00:05:37,719 Speaker 7: of our supply chains explosed to some propellants. That is 90 00:05:37,760 --> 00:05:41,160 Speaker 7: all geared around what we anticipate the global environment's going 91 00:05:41,200 --> 00:05:41,480 Speaker 7: to need. 92 00:05:45,240 --> 00:05:50,039 Speaker 8: As Steve kard You explains this, BAE System's factory is 93 00:05:50,200 --> 00:05:55,359 Speaker 8: working three shifts levels last scene post Iraq and Afghanistan. 94 00:05:55,960 --> 00:06:00,360 Speaker 8: They're making artillery shells for the British Army and Ukraine. 95 00:06:01,120 --> 00:06:05,840 Speaker 8: There is a growing realization, according to BAE that munitions 96 00:06:05,960 --> 00:06:11,400 Speaker 8: are the weapon needed in war, but BAE Systems wants 97 00:06:11,520 --> 00:06:16,600 Speaker 8: firmer spending commitments from customers. In other words, the UK's 98 00:06:16,800 --> 00:06:21,280 Speaker 8: Ministry of Defense, the mod's own report two years ago 99 00:06:21,320 --> 00:06:27,400 Speaker 8: found a seventeen billion pound equipment black hole. Alan West 100 00:06:27,400 --> 00:06:30,240 Speaker 8: has had a long career in the military and beyond. 101 00:06:30,480 --> 00:06:33,240 Speaker 8: He was first Sea Lord in charge of the Navy 102 00:06:33,279 --> 00:06:37,920 Speaker 8: and Royal Marines, chief of Defense Intelligence, and a government minister. 103 00:06:38,640 --> 00:06:43,120 Speaker 8: Admiral Lord West describes the poor state of the British military. 104 00:06:44,279 --> 00:06:47,599 Speaker 6: Our cupboard is bear in terms of extra weapons, extra ammunition, 105 00:06:47,760 --> 00:06:51,200 Speaker 6: extra missiles, things like that we've cut down on training, 106 00:06:51,440 --> 00:06:54,560 Speaker 6: We've not really had enough money to really focus hard 107 00:06:54,600 --> 00:06:57,159 Speaker 6: on recruiting and on people. When you add all these 108 00:06:57,160 --> 00:06:59,960 Speaker 6: things together, the hollowing out has been catastrophe. 109 00:07:00,240 --> 00:07:03,760 Speaker 8: Actually, how hard then, from that pretty long list and 110 00:07:04,400 --> 00:07:07,520 Speaker 8: disastrous state of affairs, as you say, a bare cupboard, 111 00:07:07,560 --> 00:07:10,240 Speaker 8: how hard do you think it's going to be to rebuild? 112 00:07:10,680 --> 00:07:13,600 Speaker 6: It's going to be extremely difficult, And I think some 113 00:07:14,040 --> 00:07:18,560 Speaker 6: politicians and people in Whitehall are deluding themselves about how 114 00:07:18,680 --> 00:07:19,600 Speaker 6: quickly it can be done. 115 00:07:21,840 --> 00:07:25,200 Speaker 8: Prime Minister Kirs Starmer has pledged defense spending will reach 116 00:07:25,280 --> 00:07:28,520 Speaker 8: two and a half percent of GDP by twenty twenty seven, 117 00:07:28,920 --> 00:07:32,280 Speaker 8: up from two point three percent currently, and then get 118 00:07:32,360 --> 00:07:35,960 Speaker 8: to three percent over the next decade. But Lord West 119 00:07:36,000 --> 00:07:38,600 Speaker 8: says those plans are too tentative. 120 00:07:39,160 --> 00:07:41,520 Speaker 6: The way to do this is rather like when in 121 00:07:41,600 --> 00:07:45,200 Speaker 6: nineteen forty six seven Levin said to atle we have 122 00:07:45,320 --> 00:07:48,440 Speaker 6: got to have an atomic bomb, there's no question about it, 123 00:07:48,600 --> 00:07:52,120 Speaker 6: and the Prime Minister and the Defense Secretary and the 124 00:07:52,160 --> 00:07:54,960 Speaker 6: Foreign secretary in cabinet said, right, we're going to do that, 125 00:07:55,520 --> 00:07:57,920 Speaker 6: and they found the money, and the country was pretty broke. 126 00:07:58,360 --> 00:08:00,800 Speaker 6: They found the money and spent the mon to get 127 00:08:00,800 --> 00:08:04,160 Speaker 6: an atomic bomb, and that meant cutting things that were 128 00:08:04,240 --> 00:08:06,480 Speaker 6: very close to their heart like the new welfare stage 129 00:08:06,960 --> 00:08:10,040 Speaker 6: and health service and things. I'm afraid this government, if 130 00:08:10,040 --> 00:08:13,120 Speaker 6: it is taking defense seriously, has to say right, we 131 00:08:13,160 --> 00:08:15,200 Speaker 6: are going to spend this money and they need to 132 00:08:15,240 --> 00:08:16,800 Speaker 6: start doing it now. 133 00:08:17,120 --> 00:08:21,120 Speaker 8: The urgency is reflected by Leonardo UK, part of the 134 00:08:21,160 --> 00:08:25,880 Speaker 8: Italian Global Defence Giant, which focuses on combat air projects 135 00:08:26,200 --> 00:08:31,920 Speaker 8: like the Eurofighter Typhoon, with hubs in Newcastle, Jovill and Edinburgh. 136 00:08:32,280 --> 00:08:36,000 Speaker 8: Clive Higgins is UK Chair and CEO. He told me 137 00:08:36,080 --> 00:08:39,120 Speaker 8: he recently hosted Prime Minister Starmer for a visit. 138 00:08:39,880 --> 00:08:42,400 Speaker 1: We've needed to increase defense spending for some time. I 139 00:08:42,440 --> 00:08:46,040 Speaker 1: would say the threat vector is increased, so that's driven 140 00:08:46,440 --> 00:08:49,400 Speaker 1: that need to change. So now increasing to two point 141 00:08:49,440 --> 00:08:53,320 Speaker 1: five potentially three percent in the next parliament absolutely critical. 142 00:08:53,600 --> 00:08:57,480 Speaker 1: We've seen a lot of transformation coming through defense in 143 00:08:57,520 --> 00:09:00,839 Speaker 1: the UK in particular, so you're seeing the structures of 144 00:09:01,400 --> 00:09:03,480 Speaker 1: defense in government transforming. 145 00:09:03,520 --> 00:09:03,720 Speaker 5: Now. 146 00:09:04,040 --> 00:09:06,679 Speaker 1: They want more pace, they want more agility, the flow 147 00:09:06,679 --> 00:09:10,599 Speaker 1: of funding has to be improved. And also recognizing that 148 00:09:10,720 --> 00:09:13,360 Speaker 1: post COVID, where we recognize that supply chain resilience was 149 00:09:13,440 --> 00:09:16,160 Speaker 1: a key attribute. We need that in defense as well. 150 00:09:16,280 --> 00:09:18,680 Speaker 1: So I think the ambitions you've seen from the UK 151 00:09:18,800 --> 00:09:22,400 Speaker 1: government with announcements on significant increases of defense bending are 152 00:09:22,400 --> 00:09:24,920 Speaker 1: really positive, but that needs to translate in terms of 153 00:09:24,920 --> 00:09:25,920 Speaker 1: reality on the ground. 154 00:09:27,920 --> 00:09:31,600 Speaker 8: The government has now released its Strategic Defense Review, with 155 00:09:31,679 --> 00:09:35,960 Speaker 8: the Prime Minister outlining plans to overhaul the British military, 156 00:09:36,120 --> 00:09:41,280 Speaker 8: including expanding the nuclear Deterrent, but still with scant details 157 00:09:41,360 --> 00:09:47,160 Speaker 8: about how it will be paid for. Ben Bridge's Chair 158 00:09:47,240 --> 00:09:50,000 Speaker 8: of Airbus, Defense and Aerospace UK. 159 00:09:51,400 --> 00:09:53,599 Speaker 4: A lot of the rhetoric, if you like, is reflecting 160 00:09:53,720 --> 00:09:55,720 Speaker 4: not only the importance of defense and the needs to 161 00:09:56,040 --> 00:09:59,080 Speaker 4: invest in defense and spend more on defense, but to 162 00:09:59,120 --> 00:10:01,520 Speaker 4: do that in the U. So I think this is 163 00:10:01,520 --> 00:10:05,120 Speaker 4: the year where we and the UK defense industry will 164 00:10:05,120 --> 00:10:07,080 Speaker 4: hope to see those words turning into action. 165 00:10:07,400 --> 00:10:09,400 Speaker 8: So you think it's a pivotal year. Then are you 166 00:10:09,440 --> 00:10:12,520 Speaker 8: doing anything to ramp up in the UK now or 167 00:10:12,559 --> 00:10:16,400 Speaker 8: are you awaiting all of those reviews and the contracts 168 00:10:16,440 --> 00:10:17,000 Speaker 8: to arrive. 169 00:10:17,360 --> 00:10:21,000 Speaker 4: The question, I guess will be what further opportunities or 170 00:10:21,040 --> 00:10:23,240 Speaker 4: requirements will come from the government and will be ready 171 00:10:23,280 --> 00:10:25,439 Speaker 4: to ramp up as you say, and ready to increase 172 00:10:26,200 --> 00:10:27,959 Speaker 4: and invest ourselves if that were to happen. 173 00:10:30,080 --> 00:10:33,840 Speaker 8: So Airbus in the UK is poised but paused. But 174 00:10:34,240 --> 00:10:38,600 Speaker 8: Marion Mesmer, senior researcher at Chatham House, explains that other 175 00:10:38,840 --> 00:10:41,480 Speaker 8: NATO countries are not standing still. 176 00:10:42,000 --> 00:10:44,680 Speaker 9: For a long time, the UK was one of the 177 00:10:44,760 --> 00:10:47,520 Speaker 9: leaders when it came to defense spending in natal, but 178 00:10:47,720 --> 00:10:50,839 Speaker 9: actually ever since the for scale Russian invasion in twenty 179 00:10:50,920 --> 00:10:55,120 Speaker 9: twenty two, other native member states, especially those along NATO's 180 00:10:55,120 --> 00:10:58,600 Speaker 9: eastern border with Russia, have increased defense spending much more 181 00:10:58,679 --> 00:11:02,480 Speaker 9: rapidly than the UK. So the UK, with spending around 182 00:11:02,480 --> 00:11:06,040 Speaker 9: two point five percent of GDP and intentions to spend 183 00:11:06,160 --> 00:11:09,480 Speaker 9: two point seven perhaps over the next several years, is 184 00:11:09,520 --> 00:11:13,320 Speaker 9: actually lagging far behind countries like Poland, which are already 185 00:11:13,360 --> 00:11:16,480 Speaker 9: spending in excess of four percent of GDP and are 186 00:11:16,480 --> 00:11:18,000 Speaker 9: also intending to spend more. 187 00:11:18,600 --> 00:11:21,600 Speaker 8: And so as Europe and NATO ramp up, there is 188 00:11:21,640 --> 00:11:24,960 Speaker 8: also the difficult question of what Britain should be preparing 189 00:11:25,160 --> 00:11:29,360 Speaker 8: for when it comes to global threats. Marian Mesmer is 190 00:11:29,480 --> 00:11:32,240 Speaker 8: clear what may be expected from Britain. 191 00:11:32,679 --> 00:11:37,360 Speaker 9: We know that Russia wants to continue to essentially increase 192 00:11:37,440 --> 00:11:39,800 Speaker 9: its own self image as a great power, so I 193 00:11:39,800 --> 00:11:42,760 Speaker 9: think the threat from Russia is really real, and what 194 00:11:42,800 --> 00:11:45,640 Speaker 9: we know about Russian strategic thinking is that if they 195 00:11:45,640 --> 00:11:49,080 Speaker 9: were to attack Natal, a likely line of attack would 196 00:11:49,120 --> 00:11:51,480 Speaker 9: be in the Baltic States, where the UK has a presence. 197 00:11:51,920 --> 00:11:55,480 Speaker 9: So the UK essentially needs to be ready to help 198 00:11:55,559 --> 00:12:00,000 Speaker 9: defend the Baltic States. 199 00:11:59,600 --> 00:12:05,239 Speaker 8: BAE Systems they are firing up the forges. Gavin Krimmings 200 00:12:05,240 --> 00:12:09,320 Speaker 8: from the Munitions Division tells me they're working on creating 201 00:12:09,559 --> 00:12:13,880 Speaker 8: sovereign defense supplies for the likes of explosives. 202 00:12:14,240 --> 00:12:17,120 Speaker 3: There are times where we do scale up to kind 203 00:12:17,160 --> 00:12:20,280 Speaker 3: of three shift work in and for the last time 204 00:12:20,320 --> 00:12:23,560 Speaker 3: all the factories were kind of at Bakala. Scale was 205 00:12:23,559 --> 00:12:25,960 Speaker 3: probably caused Iraq, Afghanistan. 206 00:12:26,320 --> 00:12:30,679 Speaker 8: The government has plans for six new munitions factories to 207 00:12:30,800 --> 00:12:34,120 Speaker 8: come soon. The ambition is now to move to a 208 00:12:34,160 --> 00:12:39,160 Speaker 8: position of war fighting readiness, but with the growing threat 209 00:12:39,200 --> 00:12:42,960 Speaker 8: of war, there are questions about whether the UK is 210 00:12:43,040 --> 00:12:47,320 Speaker 8: moving fast enough and how the country will pay for it. 211 00:12:50,840 --> 00:12:54,520 Speaker 8: So a visit to the BAE Systems factory there in Washington, 212 00:12:54,640 --> 00:12:57,600 Speaker 8: Tyne and we're well with me on that visit was 213 00:12:57,600 --> 00:13:01,720 Speaker 8: Bloomberg's Ellen Milligan, who covers you CA foreign policy and 214 00:13:01,760 --> 00:13:05,360 Speaker 8: defense at Bloomberg and she's with me in the studio. Ellen, 215 00:13:05,600 --> 00:13:09,400 Speaker 8: good to have you with me. Incidentally, the village where 216 00:13:09,440 --> 00:13:14,040 Speaker 8: that factory is located also is home to the ancestral 217 00:13:14,520 --> 00:13:17,280 Speaker 8: home of the first US President, George Washington, which I 218 00:13:17,280 --> 00:13:21,160 Speaker 8: thought felt quite significant at the time. And it's really 219 00:13:21,240 --> 00:13:23,960 Speaker 8: at the heart of kind of industrial Britain, near the 220 00:13:24,000 --> 00:13:28,560 Speaker 8: old shipbuilding yards, near the Nissan factory in Sunderland that 221 00:13:28,640 --> 00:13:31,600 Speaker 8: still churns out, you know, a huge number of vehicles. 222 00:13:32,320 --> 00:13:34,840 Speaker 8: What did you make of that visit, going to see 223 00:13:34,880 --> 00:13:39,400 Speaker 8: the factory, going to see those shells, It did bring 224 00:13:39,440 --> 00:13:41,960 Speaker 8: it home to us the seriousness of this moment. 225 00:13:42,480 --> 00:13:45,360 Speaker 10: Yeah, it was amazing to see the production line because 226 00:13:45,360 --> 00:13:47,160 Speaker 10: I don't think either of us had seen that in 227 00:13:47,200 --> 00:13:50,280 Speaker 10: person before. You write so much about the shortage of 228 00:13:50,320 --> 00:13:53,199 Speaker 10: these one five to five shells that BAA is making, 229 00:13:53,200 --> 00:13:56,360 Speaker 10: and actually to go and see the production line and 230 00:13:56,400 --> 00:13:59,320 Speaker 10: the people working on that, and how they're ramping up 231 00:13:59,360 --> 00:14:02,320 Speaker 10: production and they're moving to a twenty four to seven 232 00:14:02,720 --> 00:14:05,400 Speaker 10: shift pattern as well for the first time since Iraq. 233 00:14:05,880 --> 00:14:09,640 Speaker 10: And this plays into the UK's new defense strategy, which 234 00:14:09,679 --> 00:14:14,680 Speaker 10: is all about creating a stronger industrial base to ramp 235 00:14:14,760 --> 00:14:20,040 Speaker 10: up production of weapons and of shells if needed, because 236 00:14:20,160 --> 00:14:23,280 Speaker 10: the UK stockbars have almost completely run dry due to 237 00:14:23,520 --> 00:14:27,000 Speaker 10: under investment and support that Britain has given to Ukraine 238 00:14:27,000 --> 00:14:30,560 Speaker 10: throughout the war as well. So the UK now wants 239 00:14:30,600 --> 00:14:35,040 Speaker 10: to create an always on munitions production, which actually BAE 240 00:14:35,200 --> 00:14:38,680 Speaker 10: work quicker to that than the UK government were, so 241 00:14:38,800 --> 00:14:42,360 Speaker 10: that there is a constant line of production. So twenty 242 00:14:42,440 --> 00:14:45,520 Speaker 10: four to seven these shells are being made and that 243 00:14:45,560 --> 00:14:50,280 Speaker 10: will enable them to massively increase their stockpiles, both for 244 00:14:50,360 --> 00:14:52,280 Speaker 10: the British Army and to give to Ukraine. 245 00:14:52,640 --> 00:14:57,040 Speaker 8: So re arming for Britain is now the destination. Ellen. 246 00:14:57,080 --> 00:15:00,000 Speaker 8: The question is how does Britain get there. 247 00:15:00,080 --> 00:15:04,880 Speaker 10: Unveiled this actually very ambitious strategy to get there. It 248 00:15:05,000 --> 00:15:10,400 Speaker 10: encompasses rebuilding Britain's stockpiles both of munitions and of weapons, 249 00:15:10,440 --> 00:15:14,480 Speaker 10: which have run dry due to under investment over many decades, 250 00:15:14,520 --> 00:15:18,120 Speaker 10: but also due to the support that we've been giving Ukraine. 251 00:15:18,480 --> 00:15:22,320 Speaker 10: They want to create an always on munitions production, for example, 252 00:15:22,360 --> 00:15:26,640 Speaker 10: that can be ramped up quickly if needed if Britain 253 00:15:26,720 --> 00:15:30,640 Speaker 10: is confronted with war. For example, they want to expand 254 00:15:30,680 --> 00:15:34,000 Speaker 10: their submarine fleet, they want to expand their nuclear deterrent. 255 00:15:34,320 --> 00:15:37,480 Speaker 10: They want to provide a small uplift to the army 256 00:15:37,640 --> 00:15:41,680 Speaker 10: even in the next decade. So really ambitious plan, but 257 00:15:42,280 --> 00:15:45,080 Speaker 10: has been met by some criticism over how they will 258 00:15:45,120 --> 00:15:48,600 Speaker 10: fund it. There is a debate over whether their target 259 00:15:48,680 --> 00:15:52,200 Speaker 10: to reach three percent of GDP on defense spending by 260 00:15:52,240 --> 00:15:56,040 Speaker 10: twenty thirty four, whether that's an ambition or a firm commitment. 261 00:15:56,640 --> 00:15:59,800 Speaker 10: Over the weekend, it transpired that it was a commitment, 262 00:15:59,840 --> 00:16:02,400 Speaker 10: and then just a day later it transpired it was 263 00:16:02,440 --> 00:16:06,040 Speaker 10: back to being an ambition, and Kistama was very clear 264 00:16:06,080 --> 00:16:10,080 Speaker 10: about that. Meanwhile, we've got NATO set to up its 265 00:16:10,120 --> 00:16:13,720 Speaker 10: target to three point five percent by potentially as soon 266 00:16:13,760 --> 00:16:16,600 Speaker 10: as twenty thirty two. So there's this gap here that 267 00:16:16,720 --> 00:16:21,320 Speaker 10: remains between the UK's rhetoric and actually how it's going 268 00:16:21,360 --> 00:16:23,440 Speaker 10: to fun this in the foam commitments behind that. 269 00:16:23,760 --> 00:16:27,800 Speaker 8: This is also the first of the major defense moments 270 00:16:27,880 --> 00:16:30,680 Speaker 8: that the industry is thinking about for the whole of 271 00:16:30,720 --> 00:16:35,040 Speaker 8: this year. You mentioned the NATO Defense Minister's meeting, but 272 00:16:35,160 --> 00:16:38,200 Speaker 8: there are another number of steps that we're going to 273 00:16:38,200 --> 00:16:39,720 Speaker 8: see in the UK this year. 274 00:16:40,400 --> 00:16:44,000 Speaker 10: Yeah, we've got this big NATO summit coming up where 275 00:16:44,000 --> 00:16:46,520 Speaker 10: this new target will be agreed and the UK will 276 00:16:46,600 --> 00:16:48,800 Speaker 10: undoubtedly have to sign up to that. You know, it 277 00:16:48,840 --> 00:16:51,440 Speaker 10: was very clear this week that it wanted to take 278 00:16:51,480 --> 00:16:54,640 Speaker 10: a lead in a more lethal NATO. I don't know 279 00:16:54,680 --> 00:16:56,880 Speaker 10: how you can take a lead in NATO if you're 280 00:16:56,880 --> 00:16:59,920 Speaker 10: not signed up to the new commitments. And then we've 281 00:17:00,120 --> 00:17:04,440 Speaker 10: a number of other reviews coming out on Britain's security 282 00:17:04,520 --> 00:17:08,600 Speaker 10: strategy and the national security threats, and those will come 283 00:17:08,640 --> 00:17:10,560 Speaker 10: out later in the year. We've got an audit on 284 00:17:10,760 --> 00:17:15,280 Speaker 10: Britain's relationship with China, which, alongside Russia, was mentioned quite 285 00:17:15,320 --> 00:17:18,040 Speaker 10: a lot in the review this week in the Strategic 286 00:17:18,080 --> 00:17:21,280 Speaker 10: Defense Review, because of their nuclear power and the ramp 287 00:17:21,359 --> 00:17:23,480 Speaker 10: up of their military that we've been seeing over the 288 00:17:23,560 --> 00:17:26,560 Speaker 10: last couple of decades. So there are a number of 289 00:17:26,600 --> 00:17:30,359 Speaker 10: moments coming up, and I think the UK government is 290 00:17:30,480 --> 00:17:33,520 Speaker 10: conscious that this isn't the end point, this is actually 291 00:17:33,520 --> 00:17:36,200 Speaker 10: the beginning point. They want it to be a national conversation, 292 00:17:36,320 --> 00:17:40,960 Speaker 10: a national effort and endeavor to get the UK back 293 00:17:41,000 --> 00:17:41,800 Speaker 10: on a war footing. 294 00:17:42,359 --> 00:17:44,879 Speaker 8: Okay, well, let's broaden out the conversation, then shall we. 295 00:17:45,080 --> 00:17:48,919 Speaker 8: Bloomberg's chief UK economist, Dan Hanson is with us and 296 00:17:48,960 --> 00:17:53,159 Speaker 8: he's been analyzing these defense spending plans. Dan good to 297 00:17:53,200 --> 00:17:57,280 Speaker 8: speak to you. You've looked at the costs and it's 298 00:17:57,280 --> 00:17:59,720 Speaker 8: one thing to have an ambitious plan, it's another to 299 00:18:00,160 --> 00:18:02,720 Speaker 8: liver on it. How does Britain pay for this? 300 00:18:03,320 --> 00:18:06,399 Speaker 2: It's a really challenging backdrop. All of these demands on 301 00:18:06,480 --> 00:18:09,720 Speaker 2: defense are coming at a time when there is very 302 00:18:09,840 --> 00:18:13,919 Speaker 2: very little physical space in the UK. If you go 303 00:18:14,040 --> 00:18:16,879 Speaker 2: back even just to March, where the Office for Budget 304 00:18:16,920 --> 00:18:20,240 Speaker 2: Responsibility put out its latest forecast, it's said there that 305 00:18:20,720 --> 00:18:24,000 Speaker 2: lifting defense spending just a three percent of GDP, which is, 306 00:18:24,040 --> 00:18:27,280 Speaker 2: as Ellen said, the ambition of the government. It's not 307 00:18:27,280 --> 00:18:30,639 Speaker 2: not a commitment from two and a half percent of GDP. 308 00:18:30,840 --> 00:18:33,960 Speaker 2: Just lifting it by effectively half percent of GDP would 309 00:18:33,960 --> 00:18:38,600 Speaker 2: cost seventeen billion pounds by twenty thirty or in twenty thirty. 310 00:18:38,720 --> 00:18:40,760 Speaker 2: So that's an enormous amount of money. I mean, just 311 00:18:40,760 --> 00:18:43,800 Speaker 2: to put some context around that, that's about two p 312 00:18:44,000 --> 00:18:46,359 Speaker 2: on the basic rate of income tax if you're thinking 313 00:18:46,400 --> 00:18:49,919 Speaker 2: about paying for that in terms of tax increases. So 314 00:18:49,960 --> 00:18:52,239 Speaker 2: it's an enormous amount of money just to move to 315 00:18:52,280 --> 00:18:55,680 Speaker 2: that three percent of GDP. And of course, as Ellen 316 00:18:55,720 --> 00:18:58,680 Speaker 2: are set out there, there calls from NATO to think 317 00:18:58,720 --> 00:19:01,280 Speaker 2: about three and a half percent center GDP. We'll find 318 00:19:01,320 --> 00:19:04,879 Speaker 2: out more about that later this month. And also, of 319 00:19:04,920 --> 00:19:07,439 Speaker 2: course there's still this five percent of GDP target that 320 00:19:07,440 --> 00:19:09,959 Speaker 2: Donald Trump has been speaking about. Of course, the three 321 00:19:10,000 --> 00:19:12,199 Speaker 2: and a half percent sort of fits into that, and 322 00:19:12,240 --> 00:19:15,399 Speaker 2: I think a looser definition of defense spending that NATO 323 00:19:15,440 --> 00:19:18,240 Speaker 2: are talking about. But there are these huge demands, and 324 00:19:18,280 --> 00:19:20,080 Speaker 2: as I say, it's all coming at a time when 325 00:19:20,280 --> 00:19:22,920 Speaker 2: the public finances are extremely stretched. 326 00:19:22,920 --> 00:19:28,119 Speaker 8: And so in terms of the government's twin pledges, the 327 00:19:28,119 --> 00:19:32,439 Speaker 8: government in the UK also wants that defense spending to 328 00:19:32,600 --> 00:19:36,520 Speaker 8: grow the British economy. I wonder whether the government can 329 00:19:36,640 --> 00:19:38,360 Speaker 8: do both at the same time. 330 00:19:38,800 --> 00:19:40,840 Speaker 2: Yeah, it's a really good question, and I think there's 331 00:19:40,880 --> 00:19:44,879 Speaker 2: a there's a real debate about whether defense spending is 332 00:19:44,920 --> 00:19:49,760 Speaker 2: this sort of like this panacea for the UK's growth challenge. 333 00:19:49,960 --> 00:19:52,359 Speaker 2: You know, we've had very anemic growth in the UK 334 00:19:52,480 --> 00:19:55,240 Speaker 2: for a long time, and the previous government and this 335 00:19:55,280 --> 00:19:58,440 Speaker 2: government really looking for ways to turbo charge the economy. 336 00:19:58,800 --> 00:20:02,040 Speaker 2: I think from where I'm sitting, it's almost certain that 337 00:20:02,080 --> 00:20:04,879 Speaker 2: this will give a short term boost to the economy. 338 00:20:05,000 --> 00:20:07,679 Speaker 2: So boosting defense spending will lift the economy in the 339 00:20:07,720 --> 00:20:11,640 Speaker 2: near term, and that's obviously a positive thing. The real 340 00:20:11,720 --> 00:20:15,520 Speaker 2: question is will it produce lasting benefits? So will it 341 00:20:15,560 --> 00:20:18,680 Speaker 2: lift the level of GDP permanently? And I think there 342 00:20:19,160 --> 00:20:22,760 Speaker 2: are there's a lot more uncertainty, I think it's fair 343 00:20:22,800 --> 00:20:26,720 Speaker 2: to say, And a lot depends on how the money 344 00:20:26,760 --> 00:20:30,320 Speaker 2: is spent. So if you focus spending very much on 345 00:20:30,600 --> 00:20:35,719 Speaker 2: domestically driven investment on research and development, the academic evidence 346 00:20:35,800 --> 00:20:37,959 Speaker 2: told you that that gives you a much better chance 347 00:20:38,240 --> 00:20:41,399 Speaker 2: of boosting the economy in the longer term as opposed 348 00:20:41,440 --> 00:20:44,040 Speaker 2: to say, spending the money on day to day spending. 349 00:20:44,400 --> 00:20:46,760 Speaker 2: And the government is clearly focused on that side of 350 00:20:46,800 --> 00:20:49,240 Speaker 2: the ledger. But I think you know, for us at least, 351 00:20:49,280 --> 00:20:51,639 Speaker 2: the jury's out on whether this is the sort of 352 00:20:52,400 --> 00:20:56,240 Speaker 2: the answer, the sort of one answer to Britain's growth challenge. 353 00:20:56,640 --> 00:20:57,000 Speaker 1: Ellen. 354 00:20:57,160 --> 00:21:00,280 Speaker 8: The UK also has a particular issue because it is 355 00:21:00,320 --> 00:21:03,520 Speaker 8: one of the few NATO members in Europe that has 356 00:21:03,560 --> 00:21:07,200 Speaker 8: a nuclear deterrent and the government is keen to renew 357 00:21:07,520 --> 00:21:11,119 Speaker 8: and to expand in some senses the nuclear deterrent, but 358 00:21:11,160 --> 00:21:15,840 Speaker 8: it takes up about half of the mod's budget. How again, 359 00:21:16,240 --> 00:21:19,400 Speaker 8: is Britain going to deliver on that kind of additional spending. 360 00:21:20,000 --> 00:21:24,000 Speaker 10: I think this was actually the most significant strategic shift 361 00:21:24,320 --> 00:21:26,720 Speaker 10: this week in the review because it called on the 362 00:21:26,840 --> 00:21:31,840 Speaker 10: UK to expand its nuclear deterrance in NATO, and Trump 363 00:21:31,920 --> 00:21:34,320 Speaker 10: was not mentioned in this review, but clearly he was 364 00:21:34,560 --> 00:21:38,600 Speaker 10: overshadowing it because there are doubts is the US pulls 365 00:21:38,880 --> 00:21:44,359 Speaker 10: its security assurances from Europe that if a circumstance arises 366 00:21:44,440 --> 00:21:47,760 Speaker 10: where Europe would want the US nuclear deterrents to protect them, 367 00:21:48,000 --> 00:21:52,119 Speaker 10: whether Trump would allow that to happen. The UK and 368 00:21:52,160 --> 00:21:55,359 Speaker 10: France are the only European nations inside NATO that have 369 00:21:55,640 --> 00:22:00,960 Speaker 10: a nuclear deterrent, but France hasn't yet commit to allowing 370 00:22:01,119 --> 00:22:03,840 Speaker 10: their sovereign nuclear deterrent to cover the whole of Europe. 371 00:22:03,920 --> 00:22:07,040 Speaker 10: They are now having those discussions. They're having those discussions 372 00:22:07,040 --> 00:22:10,800 Speaker 10: with other European allies, so that's significant. But the UK 373 00:22:11,040 --> 00:22:14,520 Speaker 10: is the only European niche that has committed to using 374 00:22:14,560 --> 00:22:17,280 Speaker 10: its deterrence over the whole of Europe, over the continent 375 00:22:17,359 --> 00:22:21,760 Speaker 10: within NATO. So now the UK wants to look at 376 00:22:22,320 --> 00:22:25,960 Speaker 10: expanding its capability. Right now, it just has submarines that 377 00:22:26,000 --> 00:22:29,880 Speaker 10: can launch nukes, but they're looking at buying jets that 378 00:22:29,920 --> 00:22:32,960 Speaker 10: can launch nukes, for example, and there's other things like 379 00:22:33,000 --> 00:22:35,320 Speaker 10: I think Russia has some capability that allows them to 380 00:22:35,520 --> 00:22:37,480 Speaker 10: fire nukes of trains. I don't think the UK is 381 00:22:37,520 --> 00:22:40,360 Speaker 10: quite looking at that. But there's ways to diversify the deterrent. 382 00:22:40,760 --> 00:22:44,480 Speaker 10: That is really significant one because it shows that the 383 00:22:44,600 --> 00:22:48,240 Speaker 10: UK is fearful of the reliance of the US and 384 00:22:48,280 --> 00:22:51,600 Speaker 10: so it's really expensive. As you say, Trident takes up 385 00:22:51,600 --> 00:22:54,480 Speaker 10: a huge chunk of the UK's defense budget and it 386 00:22:54,520 --> 00:22:57,399 Speaker 10: was really interesting to hear actually down there talk about 387 00:22:57,400 --> 00:23:00,000 Speaker 10: the seventeen billion required to get to that three percent, 388 00:23:00,160 --> 00:23:03,159 Speaker 10: because that's the exact amount that was identified as a 389 00:23:03,240 --> 00:23:05,840 Speaker 10: black hole in the UK Zone equipment plan a couple 390 00:23:05,920 --> 00:23:08,760 Speaker 10: of years ago. That's slightly separate to the nuclear deterrent, 391 00:23:08,880 --> 00:23:11,960 Speaker 10: but it shows where those financial gaps are. The UK, 392 00:23:12,320 --> 00:23:15,440 Speaker 10: for the first time is unveiled exactly what the investment 393 00:23:15,520 --> 00:23:18,280 Speaker 10: plans in tried and are. They said that they will 394 00:23:18,280 --> 00:23:22,119 Speaker 10: commit fifteen billion pounds to its warhead program. I mean 395 00:23:22,160 --> 00:23:24,359 Speaker 10: that's a huge amount of money. So when you're talking 396 00:23:24,400 --> 00:23:27,440 Speaker 10: about the gap between the rhetoric and the actual funding, 397 00:23:27,520 --> 00:23:29,520 Speaker 10: these are the kinds of amounts we're talking about huge 398 00:23:29,520 --> 00:23:30,200 Speaker 10: amounts there. 399 00:23:30,440 --> 00:23:33,959 Speaker 8: So how does the government make these sums add up? 400 00:23:34,480 --> 00:23:38,440 Speaker 2: The government has experienced this pretty challenging time, I would 401 00:23:38,440 --> 00:23:40,879 Speaker 2: say on the fiscal front in terms of you had 402 00:23:40,880 --> 00:23:44,600 Speaker 2: the budget in October where the you know, you saw 403 00:23:44,800 --> 00:23:47,960 Speaker 2: guilt yields rise quite sharply. After that, we had a 404 00:23:47,960 --> 00:23:50,720 Speaker 2: bit of a fright at the start of January, and 405 00:23:50,760 --> 00:23:55,000 Speaker 2: I think investors globally are really watching governments for how 406 00:23:55,040 --> 00:23:58,920 Speaker 2: they how they tackle fiscal policy and how they think 407 00:23:58,960 --> 00:24:03,679 Speaker 2: about fiscal sustainability. So my sort of starting point for 408 00:24:03,720 --> 00:24:05,920 Speaker 2: this is that it's very unlikely that the UK is 409 00:24:05,920 --> 00:24:08,760 Speaker 2: going to get away with boring all of this extra 410 00:24:08,840 --> 00:24:12,440 Speaker 2: money that it needs to fund these defense commitments. So 411 00:24:12,600 --> 00:24:16,879 Speaker 2: that leaves two options. One is reduced spending on other things. 412 00:24:17,440 --> 00:24:20,399 Speaker 2: Now we'll hear next week about how the government is 413 00:24:20,440 --> 00:24:23,479 Speaker 2: going to dice up the spending pie in the spending 414 00:24:23,520 --> 00:24:27,040 Speaker 2: review between all the various government departments. Obviously Defense will 415 00:24:27,040 --> 00:24:29,399 Speaker 2: be a key part of that and one of the 416 00:24:29,480 --> 00:24:33,240 Speaker 2: what they call protected departments, as all health and presumably 417 00:24:33,359 --> 00:24:36,400 Speaker 2: education as well. But what that always stands to highlight 418 00:24:36,520 --> 00:24:39,040 Speaker 2: is the challenge for other government departments and the cuts 419 00:24:39,080 --> 00:24:40,920 Speaker 2: that they are real terms cuts, I should say that 420 00:24:41,160 --> 00:24:45,400 Speaker 2: they face. So the extra money to fund defense by 421 00:24:45,640 --> 00:24:49,440 Speaker 2: cutting spending elsewhere is very very limited. That really leaves 422 00:24:49,440 --> 00:24:52,640 Speaker 2: one option, and that's higher taxes, and of course that 423 00:24:52,720 --> 00:24:56,600 Speaker 2: presents numerous challenges, not least that the Chancellor has said 424 00:24:56,680 --> 00:24:59,560 Speaker 2: that she doesn't want to raise taxes again. But there 425 00:24:59,560 --> 00:25:02,840 Speaker 2: are multip tude of risks that are sort of materializing. 426 00:25:02,960 --> 00:25:05,800 Speaker 2: Defense is one, but there are others that suggest that 427 00:25:06,040 --> 00:25:09,240 Speaker 2: come October, when the next budget is due, or in 428 00:25:09,280 --> 00:25:11,480 Speaker 2: the autumn, I should say that the government is going 429 00:25:11,520 --> 00:25:14,120 Speaker 2: to have to think about potentially raising taxes again. As 430 00:25:14,119 --> 00:25:16,600 Speaker 2: I say, it's not just about defense, but defense is 431 00:25:16,640 --> 00:25:19,280 Speaker 2: one of the big fiscal risks out there, and you know, 432 00:25:19,359 --> 00:25:22,479 Speaker 2: to maintain the confidence of markets, the government is going 433 00:25:22,520 --> 00:25:24,080 Speaker 2: to have to pay for this, and as I say, 434 00:25:24,119 --> 00:25:27,120 Speaker 2: I think it's going to be through higher taxation domestically. 435 00:25:27,200 --> 00:25:30,200 Speaker 8: That is reflected in think tanks like the Institute for 436 00:25:30,240 --> 00:25:34,399 Speaker 8: Fiscal Studies saying something quite similar. Chunky taxizes was how 437 00:25:34,520 --> 00:25:36,840 Speaker 8: they put it down. Thank you so much for being 438 00:25:36,880 --> 00:25:39,880 Speaker 8: with me and for your analysis. Bloomberg's chief UK economist 439 00:25:39,960 --> 00:25:43,119 Speaker 8: Dan Hanson, thank you so much. Ellen. I want to 440 00:25:43,240 --> 00:25:46,600 Speaker 8: end with some thoughts from you. Though Britain needs to 441 00:25:46,800 --> 00:25:50,320 Speaker 8: keep up, wants to ramp up, wants to rearm How 442 00:25:50,440 --> 00:25:54,200 Speaker 8: quickly is this really going to happen? And I'd love 443 00:25:54,240 --> 00:25:57,120 Speaker 8: you to layer into that some of your thoughts from 444 00:25:57,160 --> 00:26:01,320 Speaker 8: your interactions with the defense in and with government that 445 00:26:01,400 --> 00:26:05,560 Speaker 8: you do on such a regular basis. How much of 446 00:26:05,600 --> 00:26:09,520 Speaker 8: a shift in attitude is this. I'm not sure voters 447 00:26:09,560 --> 00:26:10,879 Speaker 8: have that feeling yet. 448 00:26:11,280 --> 00:26:14,080 Speaker 10: It's really interesting when you look at the polling. The 449 00:26:14,240 --> 00:26:18,360 Speaker 10: British public actually really quite in favor of increased defense spending, 450 00:26:18,440 --> 00:26:22,320 Speaker 10: increased focus on what's described as like the insurance for 451 00:26:22,400 --> 00:26:25,040 Speaker 10: the UK, for the UK homeland. And yet when you 452 00:26:25,119 --> 00:26:28,280 Speaker 10: ask them, do you want there to be taxirizers to 453 00:26:28,280 --> 00:26:30,440 Speaker 10: pay for this? Do you want cuts in public services 454 00:26:30,440 --> 00:26:32,440 Speaker 10: to be able to fund an increase of defense spending? 455 00:26:32,720 --> 00:26:35,960 Speaker 10: It's a resounding no. And that's the tricky political environment 456 00:26:36,040 --> 00:26:40,119 Speaker 10: that Kirstarma and Rachel Resa are facing. This new defense 457 00:26:40,119 --> 00:26:43,840 Speaker 10: strategy is a ten year plan, so a lot of 458 00:26:43,920 --> 00:26:48,240 Speaker 10: the new procurement, the new factories that have been promised, 459 00:26:48,440 --> 00:26:51,320 Speaker 10: even the increase to the army size, we will not 460 00:26:51,359 --> 00:26:55,240 Speaker 10: see till the late twenty thirties. And yet the review 461 00:26:55,359 --> 00:26:59,080 Speaker 10: was very clear about the extreme threat the UK faces. 462 00:26:59,119 --> 00:27:02,160 Speaker 10: Now I was told that, you know, there has never 463 00:27:02,200 --> 00:27:05,800 Speaker 10: been a time when the UK homeland has been more vulnerable, 464 00:27:06,160 --> 00:27:08,399 Speaker 10: and that's because you know, in the Second WORLDL there 465 00:27:08,400 --> 00:27:11,160 Speaker 10: were you know, more conventional threats and yet now it's 466 00:27:11,160 --> 00:27:14,800 Speaker 10: more about threats to our critical national infrastructure, cyber threats, 467 00:27:15,119 --> 00:27:18,240 Speaker 10: threats to our deep sea cables which control almost all 468 00:27:18,280 --> 00:27:21,800 Speaker 10: of our data. We've seen blackouts in other parts of Europe, 469 00:27:21,800 --> 00:27:23,679 Speaker 10: We've seen a tax on the NHS. Those are the 470 00:27:23,760 --> 00:27:25,800 Speaker 10: kinds of threats that the UK is facing, as well 471 00:27:25,800 --> 00:27:29,080 Speaker 10: as the conventional warfare and the nuclear threat as well. 472 00:27:29,600 --> 00:27:33,040 Speaker 10: So there's this question there as to whether this is 473 00:27:33,400 --> 00:27:36,240 Speaker 10: just happening too late and that is the result of 474 00:27:36,400 --> 00:27:41,080 Speaker 10: decades of underinvestment, decades of a peacetime mentality. Now, what 475 00:27:41,119 --> 00:27:44,000 Speaker 10: the reviewers are very clear on is they want to 476 00:27:44,080 --> 00:27:49,800 Speaker 10: create an industry and a national endeavor that allows the 477 00:27:49,880 --> 00:27:53,159 Speaker 10: UK to ramp up quickly to fast forward some of 478 00:27:53,160 --> 00:27:56,240 Speaker 10: this stuff if needed. Right now, the UK does not 479 00:27:56,320 --> 00:27:58,639 Speaker 10: have the capability to do that even if it wanted to. 480 00:27:58,720 --> 00:28:01,960 Speaker 10: It doesn't have the industrial base, it doesn't have the 481 00:28:02,240 --> 00:28:06,240 Speaker 10: military capability, it doesn't even have the numbers and conventional 482 00:28:06,280 --> 00:28:10,720 Speaker 10: weapons in personnel. So they want to create that frame 483 00:28:11,359 --> 00:28:14,000 Speaker 10: so that if there is a threat that happens, say 484 00:28:14,160 --> 00:28:16,359 Speaker 10: earlier than that ten years, that we are able to 485 00:28:16,440 --> 00:28:20,359 Speaker 10: ramp up quickly if needed. So that's the idea behind this. 486 00:28:20,480 --> 00:28:24,080 Speaker 10: But yeah, there is this kind of real worry that's 487 00:28:24,440 --> 00:28:31,520 Speaker 10: because of how long, over consecutive governments, we've outsourced our capabilities. 488 00:28:31,840 --> 00:28:35,440 Speaker 10: We've relied on our allies, probably too much. We've cut 489 00:28:35,440 --> 00:28:39,040 Speaker 10: our army size, we've cut our stockpiles that there's so 490 00:28:39,200 --> 00:28:43,080 Speaker 10: much catching up to do that even despite this ambitious 491 00:28:43,200 --> 00:28:46,040 Speaker 10: new strategy, we're not going to see that implemented for 492 00:28:46,080 --> 00:28:46,960 Speaker 10: at least ten years. 493 00:28:47,840 --> 00:28:52,080 Speaker 8: So the UK has ambitions to revamp defense, laid out 494 00:28:52,120 --> 00:28:55,080 Speaker 8: in the one hundred and forty four pages of the 495 00:28:55,120 --> 00:29:01,120 Speaker 8: Strategic Defense Review, but Britain's spending commitments on firm to 496 00:29:01,120 --> 00:29:05,520 Speaker 8: make Britain already will require money, painful choices in the 497 00:29:05,560 --> 00:29:10,320 Speaker 8: budget and more effective procurement from the Ministry of Defense, 498 00:29:11,920 --> 00:29:15,520 Speaker 8: and all of this as the temperature rises with demands 499 00:29:15,560 --> 00:29:19,960 Speaker 8: for more spending from NATO to face the unknown threats 500 00:29:20,040 --> 00:29:29,640 Speaker 8: of the future. Well, that concludes this special podcast on 501 00:29:30,000 --> 00:29:33,240 Speaker 8: UK defense. Thank you so much to all of my contributors. 502 00:29:33,480 --> 00:29:35,840 Speaker 8: If you like the program, don't forget to subscribe and 503 00:29:35,880 --> 00:29:37,960 Speaker 8: give it five Stars so that other people can find 504 00:29:38,000 --> 00:29:40,880 Speaker 8: it on Apple Podcasts, Spotify, or wherever you listen.