A rather good blogger's explanation why the UK has shrunk it's military, in particular the army and the expectation that is enough for UK national interests:http://thinpinstripedline.blogspot.c...real-army.html

From the conclusion:
Given the lack of existential threats, and the reality that there is no real desire for sustained overseas operations for at least the next few years, it is hard to escape the view that the UK not only possesses a reasonably sized army proportionate to its current strategic position, but that by keeping it relatively small, it retains the funds to keep it well trained and well equipped, and in turn enabling it to punch above its weight as a partner of choice for other nations.