It is generally thought that carbon-limited conifers with low priority stem growth investment will suffer significantly reduced wood formation following defoliation by insects, as long as resource sinks (apical buds and young needles) are unaffected compared to sources (mature needles). We examined the long-term consequences of periodic defoliation by a moth (Bupalus piniaria L.) on the growth of Scots pine (Pinus sylvestris L.), by retrospectively determining, annual rates of needle retention using the needle trace method, and comparing these rates with patterns of radial growth obtained by tree-ring analysis. Cumulative moth densities in the current and previous year had the strongest negative influence on subsequent tree growth. Radial and volume increments were reduced substantially (by up to 50%) for 2-3 years after peaks in the moth population. In turn, tree growth was positively correlated with needle retention, with better growth promoting better retention in the following, two seasons. This dominant relationship masked the more subtle impact of B. piniaria on needle retention. However, when each needle cohort was examined separately, it was possible to detect the immediate effects of B. piniaria on the loss of the youngest (0 to 1-year-old) needle cohort. Needle budgeting differed for trees in two study compartments, where the rate of tree growth was evidently different. In the compartment where trees grew more slowly they retained a greater number of needle sets over time by shedding fewer of the older needles, but they responded more quickly to the negative effects of the defoliator by losing needles more rapidly in years when the defoliator was abundant.