Britain faces a potentially huge bill for its involvement in the Iraq war, analysts say, as a report warned that the country is already confronting a serious budgetary squeeze this year.
The conflict is likely to cost British taxpayers far more than the 1991 Gulf War, spending on which totalled £3.3 billion (£5.2 billion, 4.9 billion euros) at current prices.
PHOTO: AP
"The 1991 war cost about £2.5 billion at the time, but other countries donated around £2 million towards military spending, so the war really only cost us about half a billion pounds," said Professor Keith Hartley, director of the Center for Defence Economics at York University.
"It could well have cost a similar amount again if this conflict was like the last one, but it involves the invasion and occupation of Iraq -- it is a much more complex war," he said.
This time, the lack of UN-backing for the military campaign against Iraq means that Britain is unlikely to recoup much money from its allies.
"I would expect the cash cost to be much higher than it was in 1991, because that cost is being borne exclusively by the US and the UK," said Philip Whyte, senior editor at the Economist Intelligence Unit.
"In 1991, countries which sent no troops shared some of the cost," he added.
Chancellor of the Exchequer Gordon Brown has already set aside £1.75 billion in the budget for the financial year to March 2003 for the costs of war and is expected to earmark more money in his April 9 budget.
That has placed extra pressure on Brown, who earned himself the nickname of the "iron chancellor" in his early years in the job for his penchant for fiscal austerity.
The chancellor loosened his grip on the public purse strings last year to promise billion of pounds for the country's ailing public services.
But spiralling war spending, coupled with sluggish growth and existing debt problems are conspiring to make Brown's annual budget next month "his most challenging yet," accountants Deloitte and Touche warned in a report.
Public sector net borrowing could end up being 10 billion pounds higher in the next financial year to March 2004 than the deficit of £24 billion forecast in Brown in his November pre-budget report, it said.
Increased taxes to close the gap could hit already fragile consumer confidence, causing "grave" financial problems, the report counselled.
"With no more rabbits in his hat, he [Brown] has little option but to sit tight, allow borrowing to rise, and hope that the economy looks significantly healthier in a year's time," it concluded.
"If it doesn't, tough choices lie ahead."
It is impossible to predict the total amount by which the Iraq conflict might further drain the public purse, Professor Hartley said.
"After the war there will have to be an occupation force, and I think we are talking months or years, not weeks," he said.
"If Britain is going to be involved in that -- and it is hard to see how it would not be -- this will cost a lot of money."
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