US Defense Budget Will Equal ROW Combined "Within 12 Months

By Guy Anderson Editor of Jane's Defense Industry

The language used in these Jane's articles always disturbs me - it's very cold, clinical and businesslike, as if the fate of the world hinged on a random decision from some minor bureaucrat. The more I think about that, the more frightened I become.--Pete

Defense expenditure in the US will equal that of the rest of the world combined within 12 months, making it "increasingly pressing" for European contractors to develop a "closer association" with the US, corporate finance group PricewaterhouseCoopers (PwC) says.

Its report - 'The Defense Industry in the 21st Century' by PwC's global aerospace and defense leader Richard Hooke - adds that "the US is in the driving seat", raising the prospect of a future scenario in which it could "dominate the supply of the world's arms completely".

The US defense budget reached US$417.4 billion in 2003 - 46 per cent of the global total.

Less than two per cent of the US defense budget is spent outside its home market, the report notes, and of this around one per cent goes to UK contractors.

Hooke says: "The message for management teams in all this - apart from the obvious for US contractors to monopolise the industry - is that they will fail to maximise value if they fail to define accurately the business segment in which they operate.

"For Europe and the UK in particular, it means, right now, an increasingly pressing need to develop a closer association with the US market."