UK Defence Spending to Remain at 2.6% of GDP Until Next Parliament
The UK government has signalled that it will not increase defence and intelligence spending beyond 2.6% of GDP until the next parliament, despite mounting pressure from the US for Nato countries to boost their military expenditure. Chancellor Rachel Reeves made the announcement at a Financial Times event on Tuesday, stating that Britain had already made significant cuts to its foreign aid budget to fund the pledge to hit the 2.6% level by 2027.
According to Reeves, the government had outlined departmental budgets at her spending review, and any further increases in defence spending would be considered in a future parliament, subject to a mandate and full funding. As the Financial Times reports, Reeves said: "We have now set that spending for this parliament. Any further increases in defence spending would be in a future parliament and we would seek a mandate to do that . . . in a way that was fully costed and fully funded."
The comments highlight the ambivalence among Nato countries, such as the UK, in quickly meeting US President Donald Trump’s demands for higher defence spending, while also maintaining public services and fiscal stability. As the source notes, Prime Minister Sir Keir Starmer has expressed his "ambition" to spend 3% of GDP on defence in the next parliament, which is expected to run from 2029 until 2034, when fiscal conditions allow.
The Treasury has clarified that it would be a "misreading" to suggest that Reeves had ruled out further increases in defence spending before the next election, expected in 2029. A spokesperson for the Treasury told the Financial Times: "Defending our country is the government’s first responsibility and the Spending Review put in place the money to do that."
Reeves acknowledged that the planned increase to 2.6% fell short of Nato’s 3.5% target, but emphasised that the UK was moving quickly to increase defence spending. As quoted in the Financial Times, Reeves said: "It is the biggest sustained increase in defence spending in the UK since the end of the cold war. We are getting there within two years by fully funding it."
The chancellor also noted that there would be another spending review in two years’ time, when forecasts for day-to-day and capital spending would be updated. The UK’s 2.6% target comprises core defence spending at 2.5% of GDP, plus a promise to spend 0.1% of GDP on intelligence. Currently, Britain spends around 2.3% of GDP on defence.
In a broader discussion, Reeves described the UK as an "oasis of stability," particularly in light of its newly inked trade deal with the US. As reported by the Financial Times, Reeves insisted that the UK had a "positive environment" for growth, despite warnings from economists that the country faces a significant downgrade to its productivity outlook by the official government forecaster.
The chancellor confirmed that the Treasury would work with the Office for Budget Responsibility over the summer, as the watchdog prepares its next economic and fiscal outlook. Reeves told the Financial Times: "There are things moving potentially in different directions, but certainly the growth-enhancing policies should all contribute to a positive environment for growth and the size of our economy." She added: "I hope people are increasingly looking at Britain and seeing an oasis of stability."
This news article is based on a report by the Financial Times. The original article can be found here: https://www.ft.com/content/0c876f6a-9376-4fdb-8dc0-483b789d0fc1.
