2 minute read - 26th February 2025
Defence spending to reach 2.5% of GDP by April 2027
The Prime Minister has announced a significant increase in defence spending, set to reach 2.5% of GDP by April 2027 and, depending on economic conditions, 3% in the next parliament. He said the decision is driven by the UK facing a period of profound change, with conflicts overseas undermining security and prosperity at home, increasing global instability, and the need to address evolving threats like cyber warfare and climate change.
The increased funding is intended to modernise the UK’s armed forces, enhance technological capabilities in areas like AI, quantum computing, and space, and rebuild depleted stockpiles. It will also support domestic industries, creating jobs and apprenticeships, particularly outside London and the South East. The government emphasised that this investment will create a more secure environment for economic growth.
The Prime Minister has announced a significant increase in defence spending, set to reach 2.5% of GDP by April 2027 / Picture: Getty/iStock
The definition of defence spending will be broadened to include the contributions of security and intelligence agencies, effectively raising the 2027 target to 2.6% of GDP. To finance this increase, the government will reduce Overseas Development Assistance (ODA) from 0.5% to 0.3% of Gross National Income (GNI), reinvesting the funds into defence. While committed to returning ODA to 0.7% when fiscal conditions allow, the government prioritises national security in the face of current global challenges. The government states that it will ensure aid is spent more effectively, pointing to examples of increased humanitarian spending in key areas.
The Prime Minister stressed the importance of international cooperation, particularly with the US, and reiterated the UK’s commitment to supporting Ukraine and strengthening European security. A new national security strategy will be published, consolidating existing reviews and reflecting the new resource allocation.
The government highlighted the regional economic benefits of defence spending, noting that a substantial portion of the budget is allocated to businesses outside London and the South East.
In 2023-2024, the MOD spent the following across the UK:
• £7.1bn in the South East
• £6.9bn in the South West
• £3.8bn in the North West
• £2.1bn in Scotland
• £2.1bn in London
• £1.6bn in the West Midlands
• £1.5bn in the East of England
• £1.4bn in the East Midlands
• £910m in Wales
• £630m in Yorkshire and the Humber
• £380m in the North East
• £240m in Northern Ireland
