Ministry of Defence 'Facing Extra £700m Costs Post Brexit' (excerpt)
(Source: BBC News; posted Aug 10, 2016)
By Chris Vallance
The Ministry of Defence is facing extra costs of up to £700m a year following the UK's Brexit vote, experts warn.

The Royal United Services Institute (RUSI) says this is due to the fall in sterling where military equipment purchases have been made in US dollars.

After the referendum, the pound fell to its lowest level against the dollar in more than 30 years, making imports from the US more expensive.

The MoD said real terms spending on defence was rising year on year.

Prof Trevor Taylor, from the RUSI think tank, told BBC Radio 4's The World at One that the extra costs could lead to a "budget black hole", presenting a serious problem for the UK's defence stance.

'Perfect storm'

Sterling has been steadily falling in value as the referendum result and the Bank of England's efforts to shore up the economy have pushed investors into selling the pound.

The former head of the Royal Navy and Labour peer Lord West described the issue as a "perfect storm" for the MoD.

A source with experience of the issue at a high level of government said it could push an already stretched budget "to breaking point".

But another former insider, who did not wish to be named, argued sterling could well recover and the issue was merely a "headache" for the MoD.

Prof Taylor said the UK paid the US about $10 billion a year for defence products.

The MoD, he said, had already committed to buying nine P8 maritime patrol aircraft, 138 F-35B aircrafts and 50 Apache aircraft to replace the existing ones, all from the US. (end of excerpt)

Click here for the full story, on the BBC News website.


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