I'm not an economist, nor do I know about the general government decisions that would improve the economy overall. However I have little doubt that a virtuous circle in the industries that support the military; aviation, heavy engineering, electronics and other high value manufacturing would boost the economy somewhat. As mentioned earlier 100 extra VC10 Super 200s might earn Britain USD$700,000,000m that wouldn't otherwise have been earned, Medway-Trident might add hundreds of millions more, a Dutch order of 468 Rolls Royce V8 powered Chieftains would be a hefty whack as would Lightnings and Buccaneers sold to West Germany, to say nothing of getting in on the Mid East arms bazaar with Chieftains, Bloodhounds, Lightnings, Buccaneers and Harrier GR1s.
As for the size of British forces, I think a virtuous circle would reduce some of the 'push' factors and subsequent problems of equipment obsolescence, wasted or highly expensive development efforts and high costs of ownership deriving from small fleet numbers. It's no coincidence that the decision to withdraw EoS came exactly at the time when Britain would need to spend huge money on CVA01 & 02 as well as F111k for that role as well as F4M and C130K for the Home and NATO roles. Reduce/remove some of these pressures and the Government's options look quite different, after all the new Wilson government in 1965 expected to remain EoS indefinitely and in 1966 to remain until 1975 despite facing very challenging equipment circumstances required to maintain this presence.