The Ministry of Defence is being forced to slash its planned budget by £1.5 billion a year over the next three years, leaving the armed forces vying with each other to hold on to their new ships, aircraft and armoured vehicles.
The Royal Navy's two planned aircraft carriers, central to the armed forces' capabilities, will be postponed by up to two years in an attempt to delay paying much of the £4 billion bill for as long as possible.
The government announced in July it was increasing the defence budget by 1.5% a year taking it to £36.9 billion in 2010-2011.
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