Why defence inflation is sky high  

By • on March 9, 2010, 11:06 am

"The MoD faces a higher rate of inflation than other organisations because the prices of the goods and services it buys increase very quickly" writes James Kirkup in the Telegraph.  That might superficially tell us why the defence budget is under pressure, but it explains very little.         Why is it that "the prices of the goods and services MoD buys" increases so quickly? Inflation happens, it is often said, when too much money is chasing too few goods and services.  However, we know that there's certainly not too much money in the defence budget.  On the contrary, there's way too little.  So what about there being too few goods and services? "Defence inflation" is caused by deliberate constraints on the supply of goods and services. ...

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