The last few years have seen a variety of proposals for UK disarmament, for a re orientation of defence policy towards a less expensive, non-nuclear stance, more commen surate with Britain's present economic position in the world. Unfortunately, these proposals become suddenly coy and tentative as they approach the economic implications of their programme, in complete contrast to the detailed quantitative calculations they pro vide for other aspects. The Alternative Defence Commission (1983) and Prins (1983) are typical examples of this. The difficulties this lacuna creates are illustrated by the ordeal the Labour Party faced in the 1983 election campaign. They advocated, it appears, a reduc tion of British defence expenditure, which now accounts for just over 5% of GDP, to about the European average of around 3 • 5%. But they proved unable to counter the claim of the Conservative Defence Secretary, Mr Heseltine, that this policy would cost 400,000 jobs.1 The hesitancy with which proponents of reductions in military expenditure approach the economic consequences is surprising given the near unanimity in the technical litera ture. Two major studies in the UK (EIU, 1963 and Brown, 1964), studies in the US, Leontief (1965), and a recent survey (Kennedy, 1983), all indicate that disarmament represents an economic opportunity rather than an economic problem. Nonetheless, the tenor of the recent policy literature suggests that it would be useful to provide a detailed assessment of the economic consequences of a reduction in UK military expenditure from 5% to 3 ■ 5% of GDP. Since the results obtained below are broadly in line with those of the studies cited above, the contribution of this paper does not lie in the novelty of its conclusion. Rather, it provides a detailed quantitative review of the economic issues cur rently involved in a transition to lower levels of military expenditure. Since there is a wide literature already available which provides arguments to suggest that such a transition could provide real security benefits, the strategic aspects will only be mentioned in passing (D. Smith, 1980 and Alternative Defence Commission, 1983 provide detail on this).
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