This piece was first published in The Telegraph – 10th April 2026.

Britain has been badly exposed by this war. What are the vital lessons that we need to learn?

First, we were not prepared, despite clear warning signs. This failure is one of strategic thinking and risk management at the heart of Government. In an increasingly unpredictable world, resilience must become a central organising principle of policy.

This requires a more rigorous and institutionalised approach to risk assessment across Whitehall, with economic and strategic vulnerabilities identified and stress-tested on an ongoing basis. This demands a step-change in how ministers ensure the economy is resilient in the face of shocks and that all necessary areas of Government are aligned and prepared.

Second, defence spending must rise, given the unstable and unpredictable geopolitical outlook. This was already clear before the war. The UK is not a small player.

According to the International Institute for Strategic Studies, we had the fifth-highest military spending in 2025. The US spent $921bn, China $251.3bn, Russia $186.2bn, Germany $107.3bn and the UK $94.3bn.

Despite this, recent events revealed serious gaps: too few ships and munitions stockpiles that were run down by support for Ukraine and not replenished. Before we spend more, we need to ask an uncomfortable question: are we spending what we already allocate effectively?

But is the UK really prepared to spend more? As with other areas of public spending, the can is always kicked down the road. We currently spend more than five times as much on welfare as on defence. While the welfare bill rises rapidly, defence spending moves incrementally.

We tend to overpromise and underdeliver. Defence spending is set to rise from 2.3pc of GDP to more than 3pc during the next decade, but these increases are back-loaded and uncertain. The UK has not spent 3pc of GDP on defence since 1993 to 1994.

The real challenge is how to pay for it. A continuation of the present set-up, where defence competes alongside other departments and is funded by general taxation and government borrowing, is unlikely to deliver.

Perhaps it is time to introduce the idea of a hypothecated tax, paid by all, to fund defence. More probably, the can will continue to be kicked down the road.

Third, energy policy is now a direct constraint on growth and security, but it must be fixed without abandoning the green agenda. Even after the war, UK energy and electricity costs look set to remain among the highest in the world, weighing on the economy and deterring investment, particularly in energy-intensive sectors such as AI, data centres and advanced manufacturing.

The conflict has exposed the issue of energy security. The UK had among the lowest levels of strategic energy reserves in the world when the war started. We need to build storage capacity and increase reserves as a buffer.

There is also a need to diversify the energy mix and boost domestic production. This would reduce the risk of rationing in a crisis and support the balance of payments.

We must protect the environment and not ignore the risks of failing to do so. But environmental goals must be aligned with affordable and reliable energy. This must be achieved without imposing costs that the economy cannot bear.

The focus should be on energy addition, not substitution, as seen in many other countries moving towards renewables. As the cost of renewables falls and technology advances, notably in storage, their reliability improves and they gradually displace fossil fuels.

By contrast, the UK is moving towards substitution now, when renewables are not yet able to provide consistent baseload supply and at the cost of higher energy prices. The transition from a fossil fuel economy takes time.

Energy security requires a diverse mix. Renewables must continue to expand, but alongside nuclear and, where necessary, domestic fossil fuels. Greater investment in storage, batteries and carbon capture is essential.

Fourth, Britain must not drift back into the EU’s economic orbit. Good relations with Europe matter but that does not mean economic alignment. The current push for an EU “reset” risks repeating an old mistake: looking outward for solutions to domestic failures.

Moving closer to the EU – the world’s slowest-growing economic region – will not address any of the domestic UK economic challenges that are key to help deliver stronger growth, such as energy, planning or productivity. Those are domestic issues requiring genuine reform.

In seeking closer ties, we risk losing regulatory autonomy in key growth sectors such as AI and financial services. Since Brexit, UK trade intensity has risen and economic growth has been stronger or on a par with the major Continental economies. The case for realignment is weaker than often claimed.

Finally, why did financial markets see the UK as one of the most exposed economies to the war? It reflects deeper concerns about future growth and this is not helped by the impact of taxes and regulation on business.

Even before the war, a risk premium was built into UK government borrowing costs, reflecting concern about sticky inflation and the outlook for public debt. The war has reinforced those concerns. Even after the ceasefire and the recent fall in gilt yields, borrowing costs remain elevated.

One clear message is to take control of the public finances. But it is too early to conclude that the Bank of England should raise interest rates. Before the war, the market expected two rate cuts this year.

If UK interest rates are not to be cut, that is already a significant tightening in itself. The economy will suffer as a result of this war, even if it ends soon. The bar for any rate increase should be set very high.

Britain entered this war exposed, strategically, economically and financially. That was not bad luck. It reflected years of failing to tackle domestic weaknesses and of avoiding the hard reforms needed at home. That is the real lesson.