In June, John Healey made a bold move by resigning as defence secretary, citing a lack of resources and commitment from the Treasury to adequately defend the country in the face of rising threats. He called for a clearer commitment to spend 3 per cent of GDP on defence by 2030, a target he believed was necessary for national security.<\/p>\n
Now, as the new chancellor, Healey faces the challenge of figuring out how to pay for the increased defence spending he has advocated for. The government’s defence investment plan (DIP) aims to raise defence spending to 2.7 per cent of GDP by 2027-28, with a long-term goal of reaching 3.5 per cent by 2035. This plan includes an additional \u00a315 billion allocated to the DIP over the next four years, but finding the extra \u00a33.8 billion per year needed remains a daunting task.<\/p>\n
To bridge the funding gap, the government plans to trim other departments’ budgets, with most facing 1 per cent cuts and heavier reductions in transport and energy projects. Additional funding will come from “asset sales and Treasury support,” but there is still a shortfall of around \u00a31.2 billion per year. The government has postponed decisions on how to fill this gap until the autumn Budget on 28 October, with economists warning of potential impacts on other areas of spending, tax, or borrowing.<\/p>\n
Increasing defence spending to meet the 3.5 per cent target by 2035 will require tough decisions on tax and spending now. Options include cutting spending elsewhere, which may negatively impact growth and public services, raising taxes, or borrowing more, which could strain the gilt market and debt-servicing costs. Analysts caution that borrowing for defence must genuinely boost growth to justify higher debt levels.<\/p>\n
The government’s commitment to higher defence spending under Healey’s leadership is clear, but the challenge lies in finding sustainable funding sources. The road ahead will be complex, with the need for an additional \u00a325 billion per year by 2035 to meet the long-term defence spending target. As the government grapples with these financial challenges, the key question remains: how will they pay for increased defence spending in the years to come? <\/p>\n","protected":false},"excerpt":{"rendered":"
In June, John Healey made a bold move by resigning as defence secretary, citing a lack of resources and commitment from the Treasury to adequately defend the country in the face of rising threats. He called for a clearer commitment to spend 3 per cent of GDP on defence by 2030, a target he believed […]<\/p>\n","protected":false},"author":1,"featured_media":1352,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[1769,1753,1152,1750,1749],"class_list":["post-1351","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion","tag-ambitions","tag-defence","tag-fund","tag-healey","tag-john"],"_links":{"self":[{"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/posts\/1351"}],"collection":[{"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/comments?post=1351"}],"version-history":[{"count":0,"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/posts\/1351\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/media\/1352"}],"wp:attachment":[{"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/media?parent=1351"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/categories?post=1351"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/tags?post=1351"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}