A victim of lowered military ambitions
Next year we are to bring the soldiers home
For lack of money, and it is all right.
Places they guarded, or kept orderly,
Must guard themselves, and keep themselves orderly.
We want the money for ourselves at home.
SO wrote the great post-war poet Philip Larkin in his 1969 poem Homage to a Government, in response to Harold Wilson’s decision to remove troops from the British colonial base in Aden.
He could have easily been writing about current defence policy in the US and the UK. Not only are the wars in Afghanistan and Iraq coming to an end, but America and Britain have made it clear they no longer have the inclination or cash to police the world.
That is bad news for BAE Systems, the defence giant that counts the UK and US as its biggest customers. Last year, its headline sales fell by 14 per cent as the two countries reduced defence spending.
In the US, which accounts for some 47 per cent of group sales, the full effect of cuts is not yet clear. So far, projects have been delayed rather than cancelled, but no-one is in any doubt that further spending reductions in the near future will hit BAE hard. The British situation is clearer. Following the Strategic Defence and Security Review, annual sales will be permanently lower by some £500m per annum.
BAE has tried to offset the impact by restructuring the business to focus on newer high-growth areas such as cyber security. But this is jam tomorrow at best.
If the military ambitions of Britain and America are to be permanently smaller, then so too will BAE.