"The resources, bearing in mind inflation and other things, don't allow us to do the things we need to," Adm. Sir Alan West said. "We're playing games with our assets to make sure we meet our commitments.
"Over time we won't have the forces available should there suddenly be a strategic shock."
West, Britain's First Sea Lord, made the comments in an interview with the Sun newspaper and which were republished Tuesday by London's Evening Standard.
West said downsizing was leaving the Royal Navy "very stretched" on a day-to-day operational basis.
The Royal Navy is cutting back from about 31 frigates and destroyers in 2004 to 25 in 2006. Tactical submarines are being cut by two, to a total of 10. In 1970, Britain had about 64 frigates and destroyers.
A report released last year by the National Audit Office said fleet readiness had begun to drop earlier in the decade because of lack of funding, although measures were being taken to correct the problem.
"The security and wealth of this country depend on the seas and the navy," Adm. West said. "If you let things run too far down you put that security at risk."
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