Last week, Keir Starmer announced that his government would increase defence spending to 5% of GDP by 2035. The announcement came days before a historic NATO summit at The Hague, at which the new benchmark for defence spending was established. The commitment is split across two broad sectors of what constitutes the defence budget. 3.5% of the total 5%, for example, will contribute to core defence requirements, while the remaining 1.5% will be invested in security and resilience. The agreement is a major increase on the previous benchmark of 2%.
The agreement is likely a result of Donald Trump’s hardline views on the USA’s contribution to the alliance’s total defence expenditure, which he sees as unfair. The president spent much of his election campaign complaining of the lacklustre contributions made by Europe to its own defences, and even went as far to say that he would ‘encourage’ Russia to do ‘whatever the hell they want’ to NATO members who were behind on their defence budget.
The UK and other NATO allies have since agreed with the rhetoric from the White House, that Europe must do more to build up its own defences. NATO Secretary General, Mark Rutte, praised Trump for making such a historic increase possible. Rutte told the press that NATO would also further increase defence production and said that the commitment is “good for our security, good for our economies, and good for jobs.”
Impact on the UK
The 5% pledge is a stark increase on the last defence spending goals in which it aimed to reach 2.5% by 2027, and 3% by the next parliament. The Institute for Fiscal Studies has estimated that meeting the 3.5% target for core defence spending would cost an extra £30 billion a year, and would put “considerable additional pressure on public finances”. Defence Secretary John Healy has also failed to rule out tax rises to fund the increased commitment to make Britain ‘war ready’.
Conversely, Starmer has claimed that the proposed increase to the defence budget will play a role in the government’s plan for growth, and that “the benefits” of the increased defence spending “will be felt in the pockets of working people”. The government has pointed to the “stable jobs” that the increase will mean for communities across the country, including 9,500 new jobs in Berkshire, 200 new jobs at a new artillery factory in Sheffield, and 800 jobs across the country to build long range missiles for the Armed Forces.
History of UK’s defence spending
The pledge to reach 5% of GDP spending on defence is the most recent in a long chain of varying defence budgets in response to international events since the UK joined NATO in 1949. Spikes in defence spending across that period have been seen in the early 1980s due to the Falklands War and increased NATO commitments during the Cold War. The Gulf War also saw a spike in defence spending in 1991 before a slow and sustained rise in the 2000s with the UK’s involvement in the wars in Iraq and Afghanistan. Defence spending then narrowly fell across the 2010s as a result of austerity cuts, but has recently begun to rise again due to ongoing support for Ukraine.
