The UK Government has announced it will increase its defence spending by £7.7bn over the next three years.

The overall defence budget, representing a growth of 1.5% in real terms, breaks down into an annual budget of £34bn in 2008-09, £35.3bn in 2009-10 and £36.9bn in 2010-11.

The Treasury will continue to fund the additional cost of operations over and above the defence budget.

Despite the increase, defence spending as a percentage of GDP has dropped slightly to 2.1%.

Defence Secretary Des Browne also confirmed the government will place orders for two 65,000t aircraft carriers – the largest ships ever sailed by the Royal Navy.