As Britain’s Prime Minister gears up for a critical meeting with Trump in Washington next week, NATO’s former second-in-command to Europe has a sobering message for him.
Keir Starmer “will just be laughed out of court, frankly”, warned General Shirreff today, “unless there’s been a clear signal from the UK Government that defence spending is going to rise to probably around 3 per cent as a starter”.
Britain spends around 2.3 per cent of GDP on defence, which is higher than NATO’s current target of 2 per cent. But it’s well below the whopping 5 per cent figure Trump is demanding of other alliance members, while threatening to encourage the Russians “to do whatever the hell they want” to any NATO country that doesn’t cough up.
In its election manifesto, Labour promised to increase the military’s budget to at least 2.5 per cent, which would cost around £5bn extra a year. In recent weeks, ministers have avoided confirming their up-to-date target until the forthcoming Strategic Defence Review is published.
Of all the major European powers, only Poland has committed to spending anything like the 5 per cent Trump has demanded, with Warsaw planning to spend 4.7 per cent of its GDP on defence in 2025.
Opinion polls indicate that there is broad public support for raising defence spending to 3 per cent. However, we should be under no illusion about the scale of the challenge to get there.
According to estimates made by RUSI back in 2022, increasing defence spending to 3 per cent of GDP by 2030 would require £157 billion worth of additional spending over eight years. For context, the government’s contentious winter fuel payment cut to pensioners is forecast to save £1.3 billion in 2024-25.
This comes at a time when Britain’s tax burden is already at a post-war high, while the OBR’s worse-than-expected figures on UK borrowing out today show that, in the financial year to January, the UK borrowed more than £118 billion – the fourth highest borrowing period since comparable records began in 1993.
As the Chancellor struggles to find savings, one key issue to tackle will be the rising levels of economic inactivity in Britain.
According to research conducted by Fraser Nelson for Channel 4 Dispatches, the number of individuals in Britain on out-of-work sickness benefits – who are not actively seeking employment – currently stands at 3.2 million. That’s a rise of one million in just five years, with an associated welfare cost of another £10 billion a year. In some parts of Glasgow and Grimsby, almost a third of the working-age population is on sickness benefits.
When it comes to the ballooning £48bn UK welfare bill for sickness, which is expected to increase to over £60bn by the end of the decade if trends continue, the fault, says Nelson, lies not with the individuals claiming sickness benefits but with flaws in the system, which mean those struggling with long-term illness are not supported to return to the workplace, and those wanting to return to work are actively disincentivised from doing so: combine sickness benefit with disability benefit (or “PIP”) and it adds up to more than the minimum wage.
On Wednesday, The Times reported that Reeves is planning £5 billion of welfare cuts at the spending review. The Work and Pensions Secretary, Liz Kendall, is understood to be pressing the Treasury to use some of the savings for an expansion of back-to-work support services for the long-term sick, insisting this measure will pay for itself and is in everyone’s interest.
Ahead of the spending review, Reeves is under heavy pressure from officials in the MOD, who insist that any savings generated should be prioritised for their department.
Though, when it comes to increasing defence spending, a bigger budget is only half the challenge: the other crucial task will be ensuring that money is spent wisely.
There are obvious strategic calls that ministers will be required to make about how best to allocate resources between land, air and sea.
And, when it comes to investment in tech and hardware, a recognition of the ever-greater role that AI plays in defence and deterrence is important.
Warnings about the danger of re-arming without re-industrialising will also place demand on ministers to strengthen their support for Britain’s steel industry, as it prepares to weather the storm of Trump’s tarrifs. Another sticking point as Starmer gears up for his trip across the Atlantic next week.
Caitlin Allen
Deputy Editor
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Tom Arms in Observations of an Expat on Zelensky’s options
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Only blind luck can save Rachel Reeves now. Andrew Lilico in CapX.
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The end of the postwar world – Trump and Vance are sending a dark message to America’s allies. Anne Applebaum in The Atlantic.
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The hard truth about Britain’s armed forces. Julian Lindley-French in The Spectator.
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Apple removes cloud encryption feature from UK after backdoor order, reports Mark Gurman in Bloomberg.