One of the curiosities of Rachel Reeves’s spending review is that the defence budget is planned to rise in 2027 and then to stay at that level. In two years’ time, defence spending is expected to rise from 2.3 to 2.5 per cent of national income, but to rise no further after that. This is despite Keir Starmer committing just days ago to the “ambition” of raising it to 3 per cent “in the next parliament when economic and fiscal conditions allow”.
The prime minister spoke in sombre tones, at the launch of the strategic defence review last week, about the need to prepare for war and for the country to move to a state of “war-fighting readiness”. Yet all his chancellor did on Wednesday to increase defence spending further was to redefine “defence spending” to include the intelligence budget, which takes the plateau to 2.6 per cent.
Given that the increase from 2.6 to 3 per cent is a substantial one, we might have expected Reeves to set out a rising trend towards it. But no. All the prime minister’s talk of a changed world in which we must be prepared to fight wars again is backed up by an increase in spending that will take us back to the level in 2010, which will be paid for by cutting the aid budget, and then… nothing more.
So far, Starmer has resisted pressure from Mark Rutte, the former Dutch prime minister who is secretary general of Nato, and from John Healey, his own defence secretary, to put a date on his “ambition” of 3 per cent.
Just before the strategic defence review was published, Healey and Starmer clashed in private after Healey said in an interview that there was “no doubt” that the 3 per cent target would be reached in the next parliament. Leaving aside the constitutional pedantry that no parliament can bind its successor, Starmer was annoyed at this attempt to bounce him into making a firm, expensive commitment. Healey was sent out to do more interviews in which the 3 per cent figure was once again downgraded to an “ambition”.
But there will be a Nato summit in The Hague on 24 June, at which Starmer will come under further pressure. Rutte visited London this week and – after his meeting with the prime minister – made a speech in which he publicly raised the bar. “I expect allied leaders to agree to spend 5 per cent of GDP on defence,” he said. This is a number designed to impress Donald Trump, who has demanded that other Nato members spend 5 per cent, even though the US itself spends only 3.4 per cent of its national income on defence.
The small print of Rutte’s demand adds another layer of complication, as his 5 per cent figure is made up of 3.5 per cent as conventionally defined (including intelligence spending in the new British definition) plus 1.5 per cent on cybersecurity and defence-related spending.
But his message to the British people was blunt: if we are not prepared to increase defence budgets to 3.5 per cent, he said, “you had better learn to speak Russian”.
Given that Starmer refuses to put a date on the lower target of 3 per cent, this means that there is a yawning gap to be bridged at The Hague in 11 days’ time.
Because the UK is one of the higher-spending Nato members, there is some irritation in Downing Street and in the Ministry of Defence at signals from Italy and Canada, which currently spend less than 1.5 per cent on defence, that they will sign up to the 3.5 per cent figure.
Israel’s bombing of Iran will add to the sense that conflicts around the world are increasingly dangerous, and that the post-Cold War peace dividend has been exhausted. The main pressure on European Nato members to increase defence spending, however, remains the war in Ukraine and the reluctance of the Trump administration to pay for it – as Rutte suggested on Monday.
Britain will no doubt continue to help Israel defend itself against Iranian counterattacks, including those enacted through proxies such as the Houthis in Yemen, although Starmer’s response to the attacks on Iran was more neutral than in the past. But Israel vs Iran is not a war that Nato is likely to join.
The real pressure for higher Nato defence spending is the need to prevent Vladimir Putin from advancing in Ukraine and to deter him from threatening his other European neighbours.
