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Rising global tensions 'push defence spending to record high'

Published 13/06/2016

Saudi Arabia and the UAE are investing in Eurofighters, the report said
Saudi Arabia and the UAE are investing in Eurofighters, the report said

Heightened tensions in the South China Sea and conflicts in the Middle East have helped push global defence spending to a record high, a report said.

The market jumped to 65 billion US dollars (£46 billion) last year and is expected to hit 69 billion US dollars (£49 billion) in 2016, according to IHS Inc.

Its Global Defence Trade Report found that the UK had nearly doubled its imports in 2015, as it began receiving MARS tanker ships from South Korea and US CH-47 helicopters.

The move helped boost Western Europe imports to 9.6 billion US dollars (£6.8 billion) last year, up from 7.9 billion US dollars (£5.6 billion) in 2014.

But when it came to exports, the UK dropped from fourth place to fifth as it was leap-frogged by Germany who climbed into third place.

Despite the fall, Ben Moores, senior analyst at IHS, said the UK was benefiting from a major investment drive in the Middle East.

He said: "The combined value of Saudi Arabia and the United Arab Emirates' defence imports is more than all of Western Europe's defence imports combined.

"Saudi Arabia's imports grew from six billion US dollars (£4.2 billion) to 9.3 billion US dollars (£6.6 billion), an increase that is three times that of the entire sub-Saharan Africa market."

"The US, Canada, France and the UK are the main exporters of defence equipment to the Middle East and beneficiaries of this spending boom."

The Middle East emerged as the largest importing region last year, taking 21.6 billion US dollars (£15.3 billion) worth of defence deliveries.

The study also showed defence imports ramped up in South China Sea as rival countries remain at loggerheads over disputed territories.

The study found that Taiwan had bolstered its arsenal, taking in 1.5 billion US dollars (£1.1 billion) worth of imports last year compared to 517 million US dollars (£366 million) in 2009.

China also stepped up its import spending from one billion US dollars (£707 million) in 2009 to 1.5 billion US dollars (£1.1 billion) in 2015, the study said.

Mr Moores said: "The reason that imports are going up so fast is because of tensions in the Middle East and the South China Sea.

"Saudia Arabia and the United Arab Emirates are buying large amounts of precision guided missiles . You could argue that they are buying them because they are buying new Eurofighters. But they are also buying them because they want to intervene in states that are collapsing or have collapsed."

He added that the global rise in defence spending was also caused by rising GDP in developing nations who are now buying the latest defence equipment instead of developing the technology themselves.

The study found that the United States remained at the top of the export table in 2015, shipping 22.9 billion US dollars (£16.2 billion) worth of defence equipment, up from 20.7 billion US dollars (£14.6 billion) in 2014.

But in a significant shift, France looks set to overtake Russia to become the second-biggest defence exporter after increasing its backlog of orders to 55 billion US dollars (£38.9 billion) last year, up from 36 billion US dollars (£25.5 billion) in 2014.

France's exports hit 4.8 billion US dollars (£3.4 billion) in 2015 and are expected to climb to 6.3 billion US dollars (£4.5 billion) this year.

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