As the United Kingdom increases its defence budget amid broader European trends, new research questions the extent to which higher military spending drives economic growth. A study conducted by economists at the University of Greenwich, commissioned by the non-profit campaign group Invest in Britain, found that although defence expenditure does generate positive economic activity, its impact is comparatively smaller than investments in housing, transport, or renewable energy.

The analysis estimated that every £1 million spent by the Ministry of Defence supports approximately 13.1 full-time jobs. In contrast, an equivalent amount invested in renewable energy projects creates around 14.5 jobs, while affordable housing initiatives generate about 16.1 positions. Economic output effects followed a similar pattern across these sectors.

Alexander Guschanski, associate professor of economics at Greenwich and co-author of the study, explained that defence spending differs substantially from infrastructure projects. "A building site requires bricklayers, electricians, and laborers, plus architects, engineers, and suppliers," he said. "Defence equipment, however, involves significant expenditure on specialized technology and includes many ready-made products imported from abroad. This leads to fewer domestic job opportunities per pound spent."

The report cautions that raising military budgets at the expense of funding for housing or clean energy may yield little to no net gain—and potentially even negative outcomes—for the broader economy. In this context, government plans to reduce subsidies for heat pumps, aiming to partially finance an unfunded £1.2 billion annual increase in defence spending, have raised concerns.

Some analysts warn against prioritizing economic growth as the primary justification for defence investment. Ron Smith, emeritus professor specializing in defence economics at Birkbeck, University of London, argued that military budgets should primarily address strategic and security needs rather than growth objectives. He criticized recent government decisions, such as the 2025 procurement of 12 F-35A aircraft designed to carry US-controlled nuclear weapons, as examples of policy driven more by employment figures than strategic coherence. "This is a major, rather questionable strategic decision that increases our dependence on the US," Smith said. "Yet the government announcement highlights the support of 20,000 jobs across the UK. Such framing risks confusing military priorities."

While the overall economic benefits of defence spending remain contested, some research suggests that the impact depends heavily on how funds are allocated. Economists Juan Antolin-Diaz and Paolo Surico of London Business School analyzed 125 years of US data and found that military expenditure can promote long-term growth, particularly through its emphasis on research and development. Innovations such as GPS, initially funded by the US Department of Defense, illustrate how defence-related R&D can generate widespread commercial and civilian applications. Current innovations in drone technology and materials science may offer similar potential.

Surico’s additional work indicates that economic gains are larger when publicly financed research is conducted by startups rather than established firms, as younger companies stand to benefit more from disruptive technologies.

Amid competing perspectives, the findings underline the complexity of assessing defence spending’s role in national economic strategies, suggesting that careful consideration is needed to balance strategic imperatives with broader fiscal and industrial policy goals.