Rachel Reeves played down the prospects of ramping up defence spending today despite mounting pressure from Donald Trump.
The Chancellor stressed that Labour had only committed to hitting 2.5 per cent of GDP in the current Parliament.
And she suggested the ‘ambition’ after 2029 remains to reach a level of 3 per cent – even though Nato states are being asked to agree a target of 3.5 per cent at a summit later this month.
The blueprint being pushed by Mr Trump and the military alliance’s secretary general Mark Rutte would see countries pledge to hit the higher spending by the early 2030s.
A further 1.5 per cent of GDP would be required for ‘defence-related expenditure’. A timetable could be set for gradually increasing their allocations.
However, there are questions about how the UK would fund such an huge increase – roughly equivalent to an extra £30billion annually.
Britain allocated 2.33 per cent of GDP to defence last year, and is set to reach 2.5 per cent by April 2027.
Chancellor Rachel Reeves stressed that Labour had only committed to hit 2.5 per cent of GDP in the current Parliament
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The Labour Government has an ‘ambition’ of increasing that to 3 per cent in the next parliament – likely to run to 2034.
In a round of broadcast interviews this morning, Ms Reeves said the Spending Review she laid out yesterday included the ‘biggest sustained increase in defence spending since the end of the Cold War’.
‘The commitment on defence in our manifesto was 2.5 per cent… we’ve said 3 per cent in the next Parliament,’ she told Sky News.
The Chancellor said the spending plans only covered this ‘this Parliament’.
She said: ‘We will set out costed and funded plans in due course, but in this Parliament the commitment was to get to 2.5 per cent.. ‘
The generous fiscal envelope set by the Chancellor last Autumn has been put under massive pressure by the economy slowing down and Mr Trump’s trade war.
That has led analysts and political rivals to argue that more tax increases are ‘inevitable’ – although the funding gap will not crystalise until the next fiscal package.
The US itself missed the proposed Nato target by spending 3.38 per cent of GDP on defence last year – although the sheer size of its economy meant that dwarfed contributions from the rest of the alliance.
The blueprint being pushed by Donald Trump (pictured) and Nato secretary general Mark Rutte would see countries pledge to hit the higher spending by the early 2030s
Countries such as Germany face finding upwards of $60billion a year more for the military.
The increase in Italy would be equivalent to around $46billion, Canada $45billion, France £44billion and the UK roughly $40billion.
Spain – which has not invested heavily in defence up to now – could need to allocate an additional $36billion despite its economy being much smaller.
The UK’s Strategic Defence Review, published last week, recommended sweeping changes, including a greater focus on new technology, including drones and artificial intelligence based on rising budgets.
