First an apology I mis-read GDP figures from G.C. Pedden's book 'Arms, Economics and British Strategy'
which I read about a year ago it was US defence spending that was at 12.7 % GDP in '54. I guess the figure just stuck.
Here are the numbers from Pedden's Book
For the UK the average from '46 to '62 was 8.8% with the highest period of spend being '52-'58 with an average 9.2% of GDP. '52 being 10% and '58 8%
Macmillan to Eden, 23 Mar. 1956, PREM 11/1326, TNA.
‘it is defence expenditure which has broken our backs . . . [and] we get no
defence from the defence expenditure.'
Pedden concludes on the economic effects of defence expenditure in this period ('50-'69)
It was only from the late 1930s that the balance of payments and confidence in
sterling were significantly affected by the level of defence expenditure in
peace-time. Frequent sterling crises, and de-valuations in 1949 and
1967, showed that the proportion of national income being spent on
defence in the post-war period was clearly at the upper limit of what the
balance of payments would bear.
Some quotes from
From the Truman Doctrine to Detente: The Rise and Fall of the Cold War - Michael Cox Feb 1990
(if you search for the title you'll find a download-able pdf)
In a Top Secret document drawn up by the Joint Intelligence Sub Committee of the British Joint Chiefs of staff in August 1947 it was concluded that for different reasons both economic and military the USSR would 'wish to avoid a protracted war at any rate before 1955-60.'
In the first analysis from Kennan's policy Planning Staff in May 1947 it was conceded that communist activities' were not at the 'root of the difficulties of Western Europe'. Hence the US goal was not 'to combat communism' as such but 'economic maladjustment'.
Even 5 years after the war, those justifying rearmament in the US still had to agree that the US possessed 'the greatest military potential of any single nation in the world'. The Bureau of the Budget, which opposed the new build up ....... pointed out that the US was militarily superior to the USSR in five crucial areas: at sea, in the air, in terms of the economic and military potential of its allies who were moreover situated close to the Soviet Union and the supply of fission bombs as well as thermonuclear potential.
From
FOREIGN SERVICE DISPATCH 116, of September 8, 1952
FROM AMERICAN EMBASSY, MOSCOW
TO DEPARTMENT OF STATE, WASHINGTON
SUBJECT: The Soviet Union and the Atlantic Pact
When World War II came to an end, the leaders of the Soviet Union had no desire to face another major foreign war for a long, long time to come. Within the Soviet Union, the war had left great exhaustion and physical damage in its train. In addition to this, it had meant a setback of approximately a decade in the effort of the Soviet leaders to make out of the traditional Russian territory a powerful military-industrial center. It was plain that even when recovery from the damages and fatigues of the war had been effected, Russia would still be a country with a crude and unbalanced industrial foundation, lacking an adequate energetic basis and a modern transportation system. Finally, in the newly won satellite area, the Kremlin faced a formidable problem in the task of consolidation of its power, involving the liquidation of the older influential classes and political groups, the training of a new administrative class, the formation of new police and military forces, etc. All of these things were bound to take time. The building of a modern transportation system in the Soviet Union, in the absence of major aid
from capitalist sources, would alone represent at least a ten- to fifteen year operation. Another major military involvement, striking into the heart of the programs for the completion of these tasks, would obviously have most disruptive and undesirable effects, in part even dangerous to the security of Soviet power. For all of these specific domestic reasons the Kremlin leaders had no desire, at the close of World War II, to become involved in another major foreign war for the foreseeable future, and this—in terms of Soviet policy determination meant anything up to fifteen or twenty years..........
GEORGE F. KENNAN
Ambassador
The opinion of a Daily Mail Journalist.
Comment: The Soviet threat was a myth | World news | The Guardian
Excerpts from CIA Documents from 1950 during the Korean War
Weekly Summary Excerpt, 28 April 1950, The Soviet Offensive (CIA)
Although the USSR has improved its power position by announcing its possession of atomic secrets ...... there is no indication that the USSR is yet willing to initiate armed conflict with the West
Daily Summary Excerpt, 26 June 1950, Embassy Moscow’s Views on Korean Conflict
(CIA Comment)
... In sponsoring the aggression in Korea, the Kremlin probably calculated that no firm or effective countermeasures would be taken by the West. However the Kremlin is not willing to undertake a global war at this time.
Intelligence Memorandum 301, 30 June 1950, Estimate of Soviet Intentions and
Capabilities for Military Aggression
Although the USSR is considered to be unwilling to undertake a global conflict with the West at this time...
And so on and so forth