My December column "I Remember When Britain Had a Military" generated a fair amount of commentary here on Fool.com. In it, I sounded the alarm over British plans to cut the size of its air force by as much as 80% (from Cold War levels). Surprisingly, many readers liked the idea of shrinking the military. Others argued it was a moot point -- if Britain "stood down" on military spending, somebody, somewhere would certainly "stand up" to fill the gap.

Problem is, that gap is getting wider by the day, and tougher to fill. In addition to shrinking its air force, Britain is also gutting the vaunted Royal Navy.

Across the pond, there's a furious debate over the future of the Royal Navy in general, and of its naval air arm in particular. An ongoing strategic defense review just warned that plans to cancel construction of two new Queen Elizabeth-class carriers, designed to replace the retiring Illustrious, would trigger "the collapse of the British warship building industry."

Shocked at the prospect, Britain now seems likely to continue construction of the craft. But in a blow to Lockheed Martin (NYSE: LMT), which builds the F-35 warplanes that would populate the flight decks, Britain is backing away from the F-35C "jump-jet" variant of the plane. It's only outfitting one vessel to fly Lockheed's carrier variant (the F-35C) -- and even that boat won't float before 2020. Oh, and Britain's scaling back purchases of the F-35C to just 12 planes, down from an earlier expectation of 36.

Foolish takeaway
If that sounds bad, it could still get worse. Britain plans to re-examine its defense priorities in 2015. Notes DefenseNews.com, "if funding is not increased in real terms after 2015 ... the department will have to make difficult judgments about which capabilities it will need to scale back or forgo completely." Lockheed investors: Fasten your seat belts. This ride could get even bumpier.

In a world of slowing defense spending, what other surprises await Lockheed investors? Add the stock to your Fool Watchlist, and find out.

Fool contributor Rich Smith has no position in any stocks named above, but The Motley Fool owns shares of Lockheed Martin. The Motley Fool has a disclosure policy.

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