The UK government has delayed setting a timeline for meeting its target of spending 3% of GDP on defence. The Treasury confirmed on Friday that this decision will now be made during next year’s spending review.
Prime Minister Andy Burnham would have needed to allocate an additional £4.7 billion for defence over five years in the upcoming October budget. This follows former Prime Minister Starmer's announcement of an extra £15 billion for defence without specifying funding sources. The remaining £10.3 billion is expected to be raised by reallocating budgets across government departments.
Burnham and Chancellor John Healey face a challenging autumn budget, scheduled for late October, amid worsening economic conditions. The Prime Minister has committed to Rachel Reeves’s fiscal rules on debt and borrowing, while also stating he will adhere to manifesto promises of no increases in income tax, national insurance, or VAT.
Regarding the cost of living, Chancellor Healey has suggested there are no further plans to offer energy support at the October price cap. This comes as prices have risen by 4%, offsetting the impact of a previous VAT cut on energy bills.