Is the UK’s defence spending set to increase by £13 billion a year?
The Prime Minister Sir Keir Starmer today announced plans for the UK to spend 2.5% of its Gross Domestic Product (GDP) on defence by 2027. This will be funded by a reduction in Overseas Development Assistance (ODA, also known as the overseas aid budget), from 0.5% to 0.3% of Gross National Income (GNI).
Mr Starmer also said the government’s “ambition” is that defence spending will increase to 3% of GDP in the next Parliament.
He said the government will “deliver our commitment to spend 2.5% of GDP on defence, but we will bring it forward, so that we reach that level in 2027”. (The previous Conservative government had committed to reaching this figure by 2030, while before today Labour had not set a specific timeframe.)
Mr Starmer told MPs the government would maintain defence spending at that level “for the rest of this Parliament”, and claimed doing so “means spending £13.4 billion more on defence every year from 2027”.
However the £13.4 billion figure—which wasn’t mentioned in the government’s press release following the announcement of the spending increase—has since been queried, including by the Institute for Fiscal Studies (IFS) and the Conservatives, who claimed “the numbers don’t add up”.
At a press conference this evening, Mr Starmer was more specific, saying reaching 2.5% by 2027/28 would represent an “increase of £13.4 billion year-on-year compared to where we are today”.
And when we asked the government about the £13.4 billion figure, it told us it is the difference between defence spending of £66.3 billion in 2024/25, and the £79.7 billion it is now expected to increase to in 2027/28. (We assume these figures refer to NATO-qualifying spend, which the 2.5% target refers to, rather than the Ministry of Defence’s budget).
We were told that if defence spending was held at 2.3% of GDP in 2027/28, it would currently be expected to be £73.6 billion, but that the government’s announcement today means the £6.1 billion in funding from the ODA reduction will result in defence spending of £79.7 billion.
The £13.4 billion figure therefore refers to the increase in defence spending by 2027/28 compared to its current level, not the increase compared to what it might otherwise have been in 2027/28 without today’s announcement.
In its initial reaction to today’s announcement, the IFS warned the £13.4 billion figure appeared to be “misleadingly large” as it “only seems to make sense if one thinks the defence budget would otherwise have been frozen in cash terms”.
It’s not the first time we’ve seen this kind of calculation on defence spending increases, however. We wrote last year about the then-Conservative government claiming it would increase defence spending by £75 billion—a figure which assumed defence spending would otherwise have been frozen in cash terms over the following six years, and therefore decreased as a percentage of GDP.