Military Keynesianism: Austerity for the Poor, Billions for War Labour’s Broken Britain

Military Keynesianism: How Labour’s Defence Spending Fails Britain

In what can only be described as a grotesque parody of economic vision, Chancellor Rachel Reeves’ fiscal announcement—euphemistically termed a “Spring Statement” rather than the emergency budget it truly represents—reveals not merely a continuation but an enthusiastic embrace of the neoliberal orthodoxy that Labour once existed to challenge. Beneath the veneer of progressive rhetoric lies the unmistakable architecture of austerity, militarism, and class warfare that would make even the most ardent Thatcherites nod in approval. 

At the heart of Reeves’ statement lies a revealing admission: Britain’s industrial strategy will be anchored in arms and defence manufacturing, bolstered by an additional £2.2 billion for the Ministry of Defence. This comes atop the tens of billions already committed to sustaining what were essentially Biden’s proxy wars—conflicts now abandoned by Trump yet still enthusiastically funded by a Labour government desperate to prove its hawkish credentials to Washington and the arms industry.  

The grim irony is inescapable: as American foreign policy pivots away from these entanglements, Britain doubles down on financing conflicts that even their architects have begun to question. 

The Chancellor speaks of a “changing world” presenting both challenges and opportunities. Yet the industrial strategy she proposes reflects neither innovative thinking nor economic pragmatism, but rather a dangerous economic dependency on perpetual conflict. 

The fundamental flaw in this approach is twofold. First, modern defence production, contrary to nostalgic notions of wartime manufacturing booms, is increasingly automated. This isn’t the 1940s, with vast factory floors employing thousands of workers assembling shells and aircraft. Today’s military hardware is produced by sophisticated robots and specialized technicians—not the mass employment engine Reeves implies. 

Second, and more troublingly, Freedom of Information requests have revealed that even our current military spending fails to support British jobs. Combat clothing for our elite forces—including the SAS and frontline infantry—is being manufactured in China under a £70 million contract. As Colonel Richard Kemp aptly noted, this represents “an embarrassing and shameful blunder.” The irony is palpable: while Chinese sweatshops hum with production, Manchester’s historic cotton mills stand as museum pieces. 

The most sinister aspect of a defence-focused industrial strategy, however, lies in its inherent incentive structure. When your economic model depends on arms production, you inevitably create pressure to sustain demand—and that demand is war. An economy built on weapons manufacturing becomes a self-fulfilling prophecy, requiring conflicts to justify its existence. 

While a strong defence is undoubtedly essential, genuine defence policy would prioritise protections like missile defence systems rather than offensive capabilities designed for foreign interventions. If the Russian threat is indeed as dire as the government suggests, perhaps investing in an Iron Dome-style system would be more prudent than conventional forces, which offer little protection against nuclear weapons—something Russia possesses in abundance. 

The moral bankruptcy of this approach becomes most evident when juxtaposed with Reeves’ simultaneous announcement of £4.8 billion in welfare cuts. Most egregiously, the Universal Credit Health element—a lifeline for Britain’s most vulnerable citizens—will be cut by 50% and then frozen for new claimants. The message is unmistakable: money for war, even someone else’s war, but none for the poor. 

The Department for Work and Pensions earlier published , externalits impact and equality assessment , externalof the government’s welfare reforms, which suggest that the changes to benefits could lead to 250,000 more people in poverty* by 2030, including 50,000 children, increasing the poverty rate by 0.6 percentage points.

The vast majority (96%) of families that lose financially are estimated to have someone with a disability in the household.

And the DWP estimate that one-in-five (20%) households who report having someone with a disability in the household will lose out.

This assessment does not account for any changes in employment that might be caused by the welfare changes or funding for employment support.

Overall, DWP forecasts that 3.2 million families will lose out from the benefits changes, losing around £1,700 a year on average.

Losses will be concentrated among those who are no longer eligible for Pip (roughly 800,000 people, losing £4,500 a year on average) or those not eligible for the health component of universal credit (losing on average £3,000 a year). Some will lose both benefits.

The Joseph Rowntree Foundation’s sobering analysis lays bare the truth that many families already feel in their bones: living standards for all UK households are set to fall by 2030, with the poorest experiencing a decline twice as severe as others. The average family will be £1,400 worse off; the lowest income families will lose £900 annually—a catastrophic 6% of their already stretched disposable income.

This grim forecast delivers a fatal blow to Keir Starmer’s first self-proclaimed “milestone” of “putting more money in the pockets of working people.” Rather than achieving this modest ambition, Starmer is on track to preside over the first government since 1955 to oversee falling living standards across an entire parliament. Some milestone indeed.

Chancellor Rachel Reeves, trapped in the prison of her “iron-clad” fiscal rules, now chooses to swing the axe at public spending rather than consider more equitable alternatives. Most perversely, the government seeks to extract £5 billion by cutting benefits for the vulnerable, including disabled people—a betrayal so profound it has sparked revolt within Labour’s own ranks.

The arithmetic of decline is brutally simple: by 2030, mortgage holders will pay approximately £1,400 more annually in interest, renters will surrender an additional £300 in rent, and average earnings will fall by £700. This triple blow falls most heavily on the poorest third of households, who remain disproportionately crushed between the millstones of rising housing costs, falling real wages, and frozen tax thresholds.

This represents the fundamental failure of Labour’s neoliberal conversion. Industrial strategies centred on military production inevitably lead to military action. Prolonging of wars and yes that old favourite “Forever wars”. 

A government truly committed to its people would invest in them directly—in education, healthcare, and opportunity creation. They would build infrastructure, not dismantle welfare. They would articulate a vision of societal flourishing, not one of destruction. 

The Chancellor correctly observes that “it’s a changing world.” Yet her response embodies the warning Antonio Gramsci offered during the last great global transformation that led to world wars:

“The old world is dying, and the new world struggles to be born; now is the time of monsters.” 

As Britain faces genuine economic challenges, Labour offers not transformation but the familiar monsters in new clothing: austerity for the vulnerable, blank checks for the military-industrial complex, and a vision of prosperity built on the expectation of perpetual conflict. This is not progressive governance; it’s neoliberalism with a red rosette.

Paul Knaggs