The subsidy savings from reducing UK arms exports

Following the Gulf War, international discussions took place about multilateral restraints on “destabilising arms transfers”. Given that the UK is one of the leading exporters of arms, any reduction in such exports would affect the UK economy. The UK government spends considerable sums promoting such exports and it benefits from defence exports as they reduce the Ministry of Defence’s procurement costs. This paper analyses the direct financial implications of arms exports to the UK government, both as a buyer of defence equipment and as a promoter of such exports. The results suggest that in the UK each job generated by arms exports is subsidised by just under £2,000 per annum and that a one-third reduction in UK defence exports would save the taxpayer some £76 million per annum (at 1995 prices).