The new Labour Government was elected with a majority of 411 seats (from a total of 650) in the House of Commons and a clear mandate to implement its manifesto. The UK faces a number of challenges, including a troubled economy. This FlagPost considers the contribution the UK can be expected to make in Australia’s region.

Challenges facing the UK

Stephen Bartholomeusz, the Sydney Morning Herald’s senior business columnist, notes that the new UK Government must face up to the prospect of ‘governing one of the world’s most poorly performing advanced economies’. Battered by the economic consequences of Brexit, the impact of COVID, a period of high inflation, and higher commodity prices caused by the war in Ukraine, Bartholomeusz notes that the country must address a legacy of ‘low growth, debt and deficits’.

Reuters highlighted in July 2024 that UK economic growth has been sluggish since the
2008–09 global financial crisis and that countries such as Germany and the US have outperformed the UK. This has led to a situation in which UK living standards ‘are on course to suffer their first fall over the course of a parliament since the 1950s’.

The country’s poor economic performance and rising energy costs have contributed to a rise in absolute poverty, which has reached the highest levels observed in almost 30 years with 18% of Brits being categorised in 2022–23 as living in absolute poverty.

Furthermore, despite politically controversial immigration levels that should address a shortage of workers, the UK is the only country in the G7 in which the share of working-age people who are neither working nor seeking employment is higher than before the pandemic.

Additional challenges abound, such as a shortage of affordable housing and National Health Service waiting lists that will, according to the British Medical Association, ‘take years to clear’.

UK defence spending and prioritisation

Labour’s manifesto ‘committed to spending 2.5% of GDP on defence as soon as we can’. Given that a House of Commons Library report noted in 2023 that the UK already spends an estimated 2.3% of GDP on defence,  it appears unlikely that UK defence spending will rise significantly in the foreseeable future, despite Europe’s deteriorating strategic circumstances – illustrated by Russia’s invasion of Ukraine and the antipathy US presidential candidate Donald Trump has displayed towards alliance commitments.

In a constrained fiscal environment, the Ministry of Defence will have to compete for resources. Recent history suggests that it is unlikely to be the recipient of significant largesse. The UK’s defence budget has stagnated over the last decade, with real defence spending declining between 2009–10 and 2016–17 from £57 billion to £44.5 billion in today’s prices, before starting to increase again in 2022–23 to nearer its 2010 levels, according to the House of Commons Library. Consequently, UK defence investment is likely to prioritise challenges closer to home.

What kind of role is the UK likely to play in the Indo-Pacific?

John Healey, the UK’s new Secretary of State for Defence, argued last year that a Labour government would be ‘more realistic’ about the role the UK can play, noting that it lacks the resources to maintain strong military forces in both the Indo-Pacific and the Euro-Atlantic regions, and that the UK needed to fill a ‘Europe-shaped hole’ in its foreign and defence policy. Healey’s travel to Ukraine to meet with President Zelensky within 48 hours of his appointment reinforced that Europe is the UK’s key priority.

David Lammy, the new Foreign Secretary, reiterated this approach in a recent Foreign Affairs article, in which he stated ‘European security will be the Labour Party's foreign policy priority’. The UK, therefore, may struggle to find the resources required to contribute significantly to a favourable strategic balance in the Indo-Pacific, despite being a part of the AUKUS technology partnership and committing to maintaining a rotational presence at HMAS Stirling in the form of a Royal Navy submarine.

Nevertheless, despite the challenges it faces, the UK enjoys enduring strengths that will help it to contribute to the Indo-Pacific, and Australia can expect the UK’s role to be characterised by continuity.

As Lammy observes, the UK has the world’s sixth largest economy, first-rate universities, vibrant cultural industries and a track record of contributing to partnerships, alliances, global security and development. Furthermore, UK interests as described by Lammy are similar to those articulated by the Australian Government. In his Foreign Policy essay, Lammy highlights the importance of achieving a two-state solution to the Israel-Palestine conflict; addressing the climate crisis – which he describes as ‘perhaps the most profound and universal source of disorder’; engaging the Global South; defending liberal values and establishing guardrails for artificial intelligence.

This suggests that there may be various opportunities for Australia to collaborate with the UK’s new government and that the UK, while focusing on domestic renewal and European security, will retain a global outlook and willingness to promote multilateral responses.

Beyond AUKUS, there is scope for Australia to work with the UK in the Indo-Pacific on a range of other matters. For example, the UK’s planned accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a regional free trade agreement, will facilitate British economic ties with the region and potentially create more opportunities for economic dialogue.

On aid, the UK and Australia could collaborate to maximise the value of their aid spending – an April 2024 British Foreign Office report (p. 16) stated that in 2023, some 30.8% of its region-specific bilateral aid was spent in Asia. And on climate change, an issue identified as an existential threat by Australia’s Pacific neighbours, working with the UK to address Pacific priorities would almost certainly improve Australia’s standing among its neighbours.

Finally, the UK and Australia could help each other to engage the Global South. Collaboration in this area could see Australia benefit from the UK’s relationship with India, while Australian relationships with key Southeast Asian countries could facilitate greater UK engagement with the region.