British soldiers recover an overturned armoured vehicle at an exercise in Bordon, Hampshire. Analysts say UK armed forces are in a critical state. AFP
British soldiers recover an overturned armoured vehicle at an exercise in Bordon, Hampshire. Analysts say UK armed forces are in a critical state. AFP
British soldiers recover an overturned armoured vehicle at an exercise in Bordon, Hampshire. Analysts say UK armed forces are in a critical state. AFP
British soldiers recover an overturned armoured vehicle at an exercise in Bordon, Hampshire. Analysts say UK armed forces are in a critical state. AFP

Will UK budget show votes trump defence in 2024?


Thomas Harding
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If UK Chancellor Jeremy Hunt decides against an increase in defence spending in Wednesday’s budget, it will demonstrate that the government is “more interested in votes than defending Britain”, analysts have told The National.

With the UK’s depleted armed forces in a “critical position” and the threat of a land war against Russia increasing, neglecting the nation’s defences would mean “Britain won’t deter anybody”, said retired British Army colonel Hamish de Bretton-Gordon.

The British Army in particular is in a weakened state, being reduced to 72,000 soldiers at a time when the war in Ukraine has demonstrated that large numbers of troops and equipment are vital.

Defence analysts have compared Britain’s position – and indeed much of Europe’s – to the small, poorly equipped British Expeditionary Force that was roundly defeated by the Nazi panzers in France in 1940.

There are also growing calls for a major UK defence review to realign the forces to the threats now faced, although that is unlikely to take place until after the general election later this year.

If the defence budget remains unchanged, Mr de Bretton-Gordon said this would be “a real disappointment, demonstrating that the politicians are purely interested in the election rather than defending Britain and preventing a war in Europe”.

Ukrainian soldiers take part in an urban warfare exercise with British troops. Reuters
Ukrainian soldiers take part in an urban warfare exercise with British troops. Reuters

‘Pre-war generation’

While Defence Secretary Grant Shapps has warned that today’s youth are a “pre-war generation”, retired brigadier Ben Barry, of the International Institute for Strategic Studies think tank, said both Prime Minister Rishi Sunak and Mr Hunt “had been conspicuous in their absence of stepping up to say, we agree”.

However, the government has in the past year committed an extra £2.5 billion ($3.16 billion) in real terms to the defence budget.

But Britain needed to prove it had a “credible defence”, otherwise it would become “horrifically irrelevant, especially if we don't stop Putin in a conflict in Europe”, Mr de Bretton-Gordon said.

“We have a pretty small stick to beat [Russia's President Vladimir] Putin with at the moment.”

Mr Barry was the lead UK analyst behind the IISS’s annual Military Balance report on the state of global armed forces. Since writing the British military entry, he said that the force was “more hollowed out than I thought, particularly in terms of manning and training”.

Extra budget money could rapidly “rectify many weaknesses” by “rapidly rebuilding military capability”, procuring ammunition stockpiles, spare parts and improving readiness.

He also highlighted less obvious issues. For example, 30,000 personnel were deemed “dentally unfit to deploy on operations” because dentists had been diverted to thousands of Ukrainian troops being trained in Britain.

“The traffic light should be flashing red, and there should be urgent work being done to rebuild the weaknesses in military medical capability but there is no sense of urgency,” said Mr Barry.

Defence Secretary Grant Shapps with Ukrainian and British soldiers, at Catterick Garrison, in North Yorkshire. PA
Defence Secretary Grant Shapps with Ukrainian and British soldiers, at Catterick Garrison, in North Yorkshire. PA

Boots not cyber

Ukraine had debunked the hope that wars could be fought with “technology, cyber and space” with “boots on the ground” turning out to be key, Mr de Bretton-Gordon said.

He suggested that defence spending should be a minimum 2.5 per cent of GDP and rise to 3 per cent to “have an army of mass that will allow us to deter future aggression, and deter Putin”.

Many European countries do not make the Nato 2 per cent threshold for defence spending, while Russia’s is 7 per cent and America’s 3 per cent.

Britain can also barely field an armoured brigade – let alone an armoured division – for Nato’s defence and its army should also be increased to between 90,000 and 100,000 troops, the analyst said.

The army was also facing a retention crisis with officers and soldiers leaving, fed up with poor accommodation, medical care and generally low morale.

“The threats at the moment are higher and worse than they've ever been, even during the Cold War,” Mr de Bretton-Gordon said.

“We have an army of 72,000 men which we can't even man and retain, which just shows what a critical position we are in.”

Flags from a pro-Kremlin rally in Stavropol, southern Russia, to celebrate the annexation of Crimea in 2014. AFP
Flags from a pro-Kremlin rally in Stavropol, southern Russia, to celebrate the annexation of Crimea in 2014. AFP

Nuclear out

With the submarine-launched nuclear deterrent using up an estimated 26 per cent of defence’s £46 billion ($58 billion) spending, there are increasing calls for it to be separated out from budget, as it was for much of the Cold War.

“Nuclear deterrence is a national matter and it should not eat up a quarter of defence spending,” leading military analyst Paul Beaver said. He suggested it could be managed by the Cabinet Office, which already has 150 technical defence specialists.

Mr Barry agreed, adding that the money spent on the next generation of Vanguard submarines and their missiles was “absolutely staggering and subject to very little scrutiny”.

Better homes

Mr Beaver argued that the forces had enough money but it had been badly spent on unnecessary capabilities, despite the UK having the biggest budget in Europe.

“We don't spend it very well and we just don't get value for money,” he said.

“We can't have bigger armed forces until we can man the existing ones,” he added.

“We've got to have a better deal for personnel, spending money on housing and sorting out married quarters.”

A defence review was rapidly required, agreed Mr de Bretton-Gordon, because the war in Ukraine had “fundamentally changed the landscape”.

Britain had spent too much time and money concentrating on the “wrong kit”, including “clever cyber” equipment.

“On the battlefields of the Donbas [in eastern Ukraine], tanks and fighter jets are the currency that makes a difference,” he said.

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

'My Son'

Director: Christian Carion

Starring: James McAvoy, Claire Foy, Tom Cullen, Gary Lewis

Rating: 2/5

The biog

Born November 11, 1948
Education: BA, English Language and Literature, Cairo University
Family: Four brothers, seven sisters, two daughters, 42 and 39, two sons, 43 and 35, and 15 grandchildren
Hobbies: Reading and traveling

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57%20Seconds
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MATCH INFO

Uefa Champions League, last-16, second leg (first-leg scores in brackets):

PSG (2) v Manchester United (0)

Midnight (Thursday), BeIN Sports

COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3EName%3A%20%3C%2Fstrong%3EYango%20Deli%20Tech%0D%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EUAE%0D%3Cbr%3E%3Cstrong%3ELaunch%20year%3A%20%3C%2Fstrong%3E2022%0D%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3ERetail%20SaaS%0D%3Cbr%3E%3Cstrong%3EFunding%3A%20%3C%2Fstrong%3ESelf%20funded%0D%3Cbr%3E%3C%2Fp%3E%0A
Updated: March 02, 2024, 10:22 AM