Peter
£6 billion hit to the UK's defense budget caused by the exchange rate fall - it doesn't need an economic degree to see that.
I suspect you may have been too simplistic with your analyis and would be true:
1. Only if you consider that the whole of the £35Bn UK Defence Budget is spent in $US - it isn't. Whilst the loss of ~25US Cents to the Pound is a big loss the fall of the €uro of ~10 Cents is as lot less by percentage.
2. Only if you consider that the defence budget is spent entirely on equipment - it isn't. ~31% is spent on wages and ~24% is spent on property and infrastructure neither of which should be affected by the £:$ rates.
Personally, if the rates don't recover (which they most likely will) then we are looking at £3Bn at the very worst. Not insignificant, but not as bad as pointed out.
LJ