The U.K. has set out a target date for defense spending to rise to 3% of GDP, as the finance minister announced billions in aid for Ukraine in a “clear message to Moscow”.
John Healey on Wednesday set a target date of 2030 for the 3% figure, while reaffirming its NATO commitment to reach 3.5% by 2035.
Healey, who resigned as defense minister under the previous government over insufficient spending, presented his first annual budget as finance minister and highlighted a “new era of threat”.
“Today we send a clear message to Moscow: Britain will stand with Ukraine for as long as it takes,” he said as he announced an additional £10 billion ($13.3 billion) in economic and military support, based on loans, export finance guarantees, as well as £500 million in urgent military funding for this winter.
The government will set out the details of how it will meet its defense spending targets at the spending review next year, Healey told lawmakers.
“As we look ahead to the spending review, we start from a position of strength, with spending at that higher base, there will be choices we have to make about priorities,” he said.
“Today, I’m getting work underway to get there in a fiscally sustainable way,” Healey said against the backdrop of strained public finances and increasing borrowing costs.
Healey also said the National Wealth Fund and British Business Bank will deploy up to £5 billion over the next four years into defence, dual-use technologies and other sectors supporting national security to strengthen the UK defense industrial base, support domestic supply chains and attract private investment.
Chris Beauchamp, chief UK market analyst at investing and trading platform IG, said Healey’s announcement lacked detail but “it looks like defence will get the money Healey said was needed when he was defence secretary.”
“The precise path will come through next year, but it seems like the spending bonanza for Rolls-Royce and others is still on the way. It just might take a little while to arrive,” he added.
Healey also announced that Rolls-Royce will develop its next-generation turbine engine technology in partnership with the U.K. government, in an investment worth £2.5 billion.
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