Earlier quoted context omitted.
In the UK, under the UK Civil Procedure Rules, you are expected to engage in the Pre-Action Protocol and provide a substantive response within 14 days, and failure to do so can effect you credibility and standing in court. So you do not have to respond, but not doing so risks sanction from the court for non-engagement.
You're proving my point. You are catastrophising. A response to a "spurious defamation letter" does not cost "high four figures". Substantive does not refer to the cost of the response. Substantive means that it addresses the substance of the complaint. The "high four figures" you spent for a lawyer to respond (I disagree with the word "defend") to a legal threat was unnecessary. You paid a bunch of money for some lo…
"The statement is true, I will not retract" is not substantive and is effectively calling the bluff. If they take it beyond a letter, those costs will balloon further.