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Rachel Reeves shows that despite strong US pressures for NATO countries to increase their troops, the UK will not lift defense and intelligence report spending by more than 2.6% of GDP until next parliament.
The Prime Minister told a Financial Times event on Tuesday that the UK funded a pledge that it would reach a 2.6% level by 2027 and outlined the department’s budget in its expenditure review.
“We are now setting up spending for this Congress, and we ask for an obligation to do so, that further increases in defense spending will be in future Congress.
The comment highlights the ambiguity of NATO countries such as the UK in quickly meeting US President Donald Trump’s demands for defense spending in order to maintain public services and financial stability.
Prime Minister Kiel has said it is his “ambition” to spend 3% of his GDP on defense in the next parliament, which is due to be run from 2029 to 2034, as fiscal conditions allow.
He is also expected to support the NATO push to require all members to spend at least 3.5% on defense by 2035.
The Treasury said it would be a “misreading” to suggest that Reeves further excluded defence spending before the next election, expected in 2029.
“It was the government’s first responsibility to protect our country, and the expenditure review has introduced money to do that.”
Reeves on Tuesday admitted that the plan to achieve 2.6% would not meet NATO’s 3.5% target, but said the UK is moving rapidly to increase defence spending.
“It’s the biggest sustained increase in defence spending in the UK since the end of the Cold War. We’ve got there within two years, fully funded,” she said.
The Prime Minister added that once daily forecasts and capital expenditure forecasts are updated, there will be another expenditure review two years later.
The UK’s 2.6% target consists of a core defence spend of 2.5% on GDP and a commitment to spend 0.1% on intelligence. The UK currently spends around 2.3% of its GDP on defense.
In particular, due to the newly inked trade agreement with the US, she also described the UK as an “oasis of stability” in broad discussion.
She argued that the UK has a “positive environment” for growth despite warnings from economists that the country is facing a major downgrade to productivity outlook by official government forecasters.
The Prime Minister said Watchdog will work with the Treasury for budget responsibility in the summer as it prepares its next economic and financial outlook. She said OBR takes into account “a lot of factors” when forecasting a fall budget.
“While it can potentially move in different directions, it is certainly true that any policy that improves growth should contribute to a positive environment for growth and the size of the economy,” she added. “I hope people are seeing more and more UK and seeing an oasis of stability.”
