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research and defence sales, and have a significant adverse effect
Whether in the long run it would
on the balance of payments.
reduce expenditure on the defence budget is uncertain.
Approach F2
132. The above arguments against any significant reallocation of
resources as a means of effecting reductions below the Critical
level can be illustrated in a somewhat different and more aggrega-
tive way, which we examine in order to demonstrate that all possible
options have been explored.
133. Presumably the objective should be to maintain resources
devoted to one (or two) components of the Alliance's strategy at
least at the Critical level while achieving overall savings at
lower levels. Broadly the differences in annual savings between
the various levels are:-
£m a year
1978/9
1983/4
LTC 74 to Critical Level
490
765
Critical Level to First Level
200
150
First Level to Easeline Level;
400
400
400
NIL
Baseline Level to Fourth Level
If we assume, for the purposes of this illustration, that each
component of the strategy accounts for about a third of the resources,
- an assumption which has no detailed military validity but can be
reasonably made for the purpose of these illustrations, the
following can be deduced:-
a.
G
if Ministers were to require the Ministry of Defence
to reduce expenditure as a whole to the First level
of expenditure in 1978/9 (saving an addition £200m
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SENTRET