The (English) Royal Navy emerged as surprisingly powerful, when a fleet built for cannon engagement only defeated the Spanish Armada. The Spanish ships were so cramped that reloading cannon in battle was considered impractical, while the English ships were designed for continuous cannon fire, with guns reloading and repeating as rapidly as state-of
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Losing those would have been a much worse proposition than axeing the Harriers, which are decades old at this point and not exactly top-flight tech any more; we could buy some F-18s or similar off the US or France in a hurry if we had to, but there's noone that sells carriers and they take years to build.
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Are the Harriers old? Yep. On the other hand, I doubt that many would argue they aren't better at air-to-air capability than a Lynx or Merlin. Because that's what the Royal Navy will be left with: Helicopters trying desperately to do the job of tactical fighters. And that kind of under-equipped gamble paid off more often in the days of shield-wall and saxe than the days of technological warfare.
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The UK is, however, still building two proper, full-sized carriers (Queen Elizabeth and Prince of Wales - http://en.wikipedia.org/wiki/Queen_Elizabeth_class_aircraft_carrier ), which originally were not going to be fitted with catapults but now will be - those are the assets the Navy was fighting tooth and nail to save. It helps that the previous Prime Minister, in whose constituency they'd be built, set the contracts up so that cancelling them would require the government spend an equal amount of money on other ships built by the same company ( ... )
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