London, Jan 22: Britain spends less of its wealth on defence than Bulgaria, Greece and Turkey despite the constant demands placed on its Armed Forces, official figures show.
According to the Conservatives, defence spending as a proportion of the UK's gross domestic product is at its lowest since 1930, before the UK recognised the rising threat of Nazi Germany.
Soldiers return to Brize Norton from Iraq on a chartered Monarch Airlines flight due to insufficient numbers of RAF transport aircraft.
Cost-cutting imposed by the Ministry of Defence is now threatening the Navy's warship-building programme and leading to unprecedented levels of disaffection among senior serving and recently retired officers.
Des Browne, the Defence Secretary, will be challenged in the Commons today over reports of further cutbacks in the programme for new Type 45 destroyers and growing doubts on whether the Government will fulfil its promise to build two new aircraft carriers.
Julian Lewis, a Conservative defence spokesman, said last night that the Royal Navy was "bloodied, battered and on the ropes", with a "palpable feeling of betrayal" at the top as a result of a catalogue of cuts.
Ministers have ordered defence chiefs to stop the leaks about equipment shortages and cutbacks to front line capability which are hitting morale. The leaks have also infuriated the Chancellor Gordon Brown, who is being blamed for the squeeze as he prepares to take over as Prime Minister.
Figures from Nato show that Britain lags behind the United States and France as well as smaller countries such as Greece, Bulgaria and Turkey in the share of national wealth it spends on defence.
Liam Fox, the shadow defence secretary, said: "To drop to this level of our national wealth seems absolutely crazy. We have a smaller navy than the French and our ships are being mothballed. What a triumph for new Labour."
Government figures show that 2.5 per cent of the UK's GDP — or around £32 billion — was likely to be spent on defence in 2005/6 compared with 4.4 per cent in 1987/88.
The MoD has been forced to borrow from private companies through the Private Finance Initiative to ensure that the Armed Forces are prepared for the 21st century.
Despite the apparent lower level of spending, the Government has presided over a big increase in operational commitments since coming to power in 1997: Operation Desert Fox aimed at destroying Saddam Hussein's capability to produce weapons of mass destruction (1998), Kosovo (1999 ongoing), Sierra Leone (2000 ongoing), Afghanistan (2001 ongoing) and Operation Telic in Iraq (2003 ongoing).
Figures obtained by the Conservatives show that troop numbers have fallen from 101,360 full-time personnel in 1997 to 99,460 in 2007 while the Royal Air Force has seen offensive squadrons fall from 16 to 11, and the Navy has lost eight destroyers and six frigates. Soldiers' leave and training has also been squeezed.
Last November the government spending watchdog, the National Audit Office, said the Armed Forces were 5,170 below a total strength of 180,690 and since 2001 have operated at or above predicted deployment levels.
The MoD agreed operating at this level meant "additional strains" on staff, but denied forces were overstretched.
The NAO report found that, for the past five years, they had "consistently operated at or above the most demanding combination of operations envisaged" by defence planners.
Criticism of "overstretch" among the Armed Forces has been voiced by senior figures in the military.
A report drawn up for General Sir Richard Dannatt, the Chief of the General Staff when he was commander in chief of Land Command last August, warned that unprecedented pressure on the Army was forcing it to make cuts leading to "severe impediment to the delivery of operational capability".
The Government insisted that the defence budget had increased in real terms since 2000, while £1.4 billion has been set aside to cover the costs of deployments in Iraq and Afghanistan.
A spokesman said: "Although the defence budget has declined as a proportion of GDP since the height of the Cold War, the defence budget has actually been increasing in real terms and it is simply that GDP has risen more quickly.
"We currently have no plans to cut the numbers of destroyers and frigates. However the MoD routinely reviews all defence capabilities to ensure resources are directed where our front line Armed Forces need them most."