The United Kingdom has named 2030 as the year by which defense spending should reach 3% of GDP, while announcing billions of pounds in further support for Ukraine. The announcements came in the annual budget presented on Wednesday.
John Healey, delivering a first annual budget as finance minister, said the country faces a "new era of threat". The 2030 goal sits alongside the United Kingdom's existing NATO commitment to reach 3.5% by 2035, which Healey reaffirmed.
Healey resigned as defense minister under the previous government over what was seen as insufficient spending. Now in charge of the nation's finances, Healey used the budget to send what was described as a "clear message to Moscow".
"Today we send a clear message to Moscow: Britain will stand with Ukraine for as long as it takes," Healey told lawmakers. The package adds £10 billion ($13.3 billion) in economic and military support, delivered through loans and export finance guarantees. It also includes £500 million in urgent military funding for this winter.
Details of how the government will reach its defense targets will be set out at next year's spending review, Healey said. The finance minister acknowledged that hard choices lie ahead. "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," Healey said.
The budget arrives against a backdrop of strained public finances and rising borrowing costs. Healey said work was beginning to reach the targets "in a fiscally sustainable way".
The budget also contained measures aimed at the domestic defense industry. The National Wealth Fund and the British Business Bank will deploy up to £5 billion over the next four years into defense, dual-use technologies and other sectors that support national security. The goal is to strengthen the defense industrial base, support domestic supply chains and draw in private investment.
Healey also announced that Rolls-Royce will develop its next-generation turbine engine technology in partnership with the government, in an investment worth £2.5 billion.
Chris Beauchamp, chief UK market analyst at investing and trading platform IG, said the announcement lacked detail. Even so, he said, "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," Beauchamp added.
