Whilst accepting some of what Graham says, I think he and Tornadoken (particularly the latter) have rather missed the point of defence.
For example Gibbon (Tornadoken) may well have decided 1% was a decent figure for GDP spent on defence - correct me if I got this wrong, but vol 1 was published in 1776 or thereabouts, so unless we're discussing a universal constant like Pi or the speed of light in a vacuum, I don't see that it is particularly sensible to base defence spending on the opinion of somebody who died 200 years ago, based on an empire that peaked almost 2000 years earlier.
You almost can't express a suitable defence budget on GDP terms - first off, let's consider this idea - in 2010 the UK produces goods and services valued at 10 squillion bucks, we spend 0.5 squillion on defence because we perceive the threats to be X, Y , Z.
In 2011 we have a very bad year, it starts when the chancellor sticks 5 squillion on the second favourite in the Derby and goes downhill from there... the threats haven't changed, so should we halve the defence budget simply because our GDP fell? Does it actually make sense to decide defence will cost X, because defence ought to be Y% of GDP, and to hell with the fact that the PM has signed us up to 3 brushfires, an NFZ, and a small war in the meantime?
Shouldn't our defence budget be something we work out based on the tasks we allocate to the armed forces and the kit they need to do it?
MBT's - we still have them, they were used in the Gulf, to be truthful I'm a cautious soul, I like to keep one foot on the ground, I'd like to wait a while longer before we bin something that potent. I don't think the Russians are coming, but I'm not convinced we'll never need MBT's again. If you are then well done, I'll just go check past posts to see how long ago you predicted the current turmoil in the Middle East and Africa....
Companies deliver profits to shareholders, that is indeed their role and it is a little naive to expect anything more from them, so my brain agrees with Graham to a fair degree - but we're also talking about defence capability, and I feel that there should be some sort of quid pro qou in all this where we maintain a capability in exchange for having provided BAE with a stable economy to operate within for the past few decades. Reality intrudes of course, and loyalty means nothing - a sad fact many servicemen are now learning.
There's a tendency to view the past in a rosy light, yes we had hundreds of jet fighters 50 years ago, just as well considering how many crashed and killed their pilots each year..... but like a good few I think we're now awfully close to the lowest we've ever been, and I don't think BAE are doing very much to alter that perception.
It mat be inevitable, but that doesn't stop it being sad.
Dave