A new analysis has raised concerns that the UK government’s decision to redirect billions of pounds from infrastructure investment to defence spending could ultimately reduce employment across the country, despite official claims that increased military investment will stimulate economic growth. According to researchers examining the government’s own projections, the reallocation of public spending may lead to a net loss of approximately 10,000 jobs by the end of the decade, as reductions in infrastructure investment outweigh employment gains generated by the defence sector.
The findings come after Prime Minister Keir Starmer unveiled a major Defence Investment Plan (DIP), committing an additional £15 billion to strengthen the UK’s armed forces, modernise military capabilities and expand domestic defence manufacturing. The government has described the initiative as a long-term strategy to reinforce national security while simultaneously supporting British industry, innovation and employment.
However, the funding strategy behind the plan has prompted significant debate. While ministers argue that increased defence expenditure will generate thousands of new jobs and stimulate economic activity, critics contend that financing the programme through cuts to infrastructure budgets could produce the opposite effect by reducing employment in sectors that traditionally create more jobs per pound invested.
Questions Raised Over Funding Strategy
The Defence Investment Plan was introduced after months of internal discussions over the scale of military investment required in response to evolving global security challenges. The package includes an additional £15 billion in defence funding, although government documents indicate that £6.8 billion will be financed through reductions in departmental capital investment, while a further £4.7 billion remains without an identified funding source.
The uncertainty surrounding how the remaining funding gap will be addressed has fuelled criticism from economists, trade unions and policy experts, who argue that the government has yet to fully explain the broader economic implications of diverting investment away from other public sectors.
Researchers from the Transition Security Project examined official government employment data alongside projected investment levels and concluded that while increased defence spending could generate approximately 10,000 additional jobs by the 2029–30 financial year, reductions in infrastructure investment could eliminate nearly twice that number.
According to the analysis, the resulting net impact would be the loss of around 10,000 jobs across the wider economy.
Infrastructure Investment Generates More Employment
The report argues that investment in sectors such as transport, energy, healthcare and education generally produces significantly higher employment returns than equivalent spending on defence.
Researchers highlighted government estimates indicating that every additional £1 million invested in defence creates approximately 2.4 direct and indirect jobs within the United Kingdom. By comparison, data from the Office for National Statistics suggests that every £1 million invested in transport infrastructure supports around 11.5 jobs, while the same level of investment in energy and net-zero projects generates approximately 10 jobs.
This substantial difference means that transferring public investment away from infrastructure projects and towards defence may reduce the overall number of jobs supported by government spending.
Based on planned spending reductions, researchers estimate that withdrawing approximately £2 billion from infrastructure-related departments during the 2029–30 financial year could result in the loss of nearly 20,000 jobs, offsetting employment gains expected within the defence industry.
Researchers Challenge ‘Defence Dividend’ Claims
Khem Rogaly, co-author of the analysis, argued that expectations of a broad economic “defence dividend” may be overstated.
According to the report, military expenditure often generates fewer domestic employment opportunities because defence supply chains rely heavily on international manufacturers and increasingly automated production methods.
Researchers also noted that significant portions of defence procurement involve equipment manufactured overseas. For example, some planned investment includes the purchase of advanced military aircraft produced primarily in the United States, meaning part of the economic benefit may accrue outside the UK rather than supporting domestic employment.
The report further suggests that rapid advances in automation, artificial intelligence and advanced manufacturing within the defence industry have reduced the sector’s labour intensity compared with infrastructure, construction and public services.
As a result, each additional pound invested in defence may create fewer employment opportunities than investment directed towards sectors requiring larger workforces.
Trade Unions Voice Concern
Trade unions have echoed concerns over the proposed reallocation of public investment.
Andrea Egan, General Secretary of Unison, argued that reducing funding for government departments responsible for essential public services in order to finance higher military spending could have significant consequences for employment across healthcare, education and local government.
She stated that the analysis highlights the potential cost of redirecting investment away from public services toward defence, warning that the strategy may reduce employment while limiting resources available for schools, hospitals and other essential infrastructure.
Union representatives have also questioned whether the government has fully considered the broader economic opportunity costs associated with prioritising military expenditure over investment in sectors with stronger employment multipliers.
Government Defends Defence Investment Plan
The government has strongly defended its approach, maintaining that increased defence spending represents both a national security necessity and an important economic opportunity.
A government spokesperson said the defence sector currently supports approximately 272,000 jobs across the UK, alongside more than 25,000 Ministry of Defence apprenticeships. Officials also stated that the Defence Investment Plan is expected to stimulate innovation, strengthen domestic manufacturing, expand defence exports and support the creation of nearly 60,000 additional jobs by the end of the decade.
Ministers argue that the evolving international security environment requires greater military preparedness and sustained investment to ensure the UK remains capable of responding to future threats.
According to the government, the strategy is designed not only to enhance operational readiness but also to reinforce Britain’s industrial base through increased defence production and technological development.
Political Debate Intensifies
The funding model has also generated political controversy following reports that the additional defence expenditure will require significant reductions in capital budgets across several government departments.
Among those expected to face the largest spending reductions are the transport and energy departments, both of which oversee major infrastructure programmes. Initial measures have already included the cancellation of two planned road improvement projects, while officials are reportedly reviewing spending on home insulation initiatives and carbon capture and storage programmes.
The Defence Investment Plan also follows the resignation of former Defence Secretary John Healey, whose departure came shortly before the policy was formally announced after prolonged internal discussions regarding military funding requirements.
Meanwhile, Andy Burnham, widely viewed as a leading contender to succeed Starmer, has pledged that any future government under his leadership would ensure defence commitments are fully financed. Speaking publicly after the announcement, Burnham confirmed that he had not been informed of the funding shortfall before the plan was unveiled but emphasised that maintaining credible financing arrangements would remain a priority.
Balancing National Security and Economic Growth
The latest analysis has intensified debate over how governments should balance defence priorities with long-term economic development. While strengthening military capabilities remains a strategic objective amid heightened geopolitical tensions, economists note that investment choices inevitably involve trade-offs affecting employment, productivity and regional growth.
As policymakers continue refining the UK’s long-term defence strategy, questions remain over whether reallocating infrastructure funding can simultaneously achieve both national security objectives and sustained economic expansion. With competing analyses presenting sharply different assessments of the employment impact, the effectiveness of the government’s investment strategy is likely to remain a central issue in future political and economic discussions.