Key facts
- Rolls-Royce and BAE Systems shares rose following Keir Starmer's announcement of a £15 billion defence spending increase.
- Keir Starmer defended his £298 billion defence investment plan at Prime Minister's Questions.
- Critics argue the plan has a £4.7 billion funding gap for his successor.
- Defence spending is projected to increase from 2.6% to 2.7% of GDP by 2030.
- Kemi Badenoch criticized the plan as insufficient and £5 billion short.
Rolls-Royce and BAE Systems shares saw an increase following Keir Starmer's announcement of a £15 billion expansion in defence spending. The plan, however, has drawn criticism regarding its funding and impact on other infrastructure projects.
Starmer defended his £298 billion Defence Investment Plan (Dip) at Prime Minister's Questions, stating it would increase defence spending from 2.6% of GDP in 2027 to 2.7% by 2030, with a trajectory to reach 3% in the next parliament. This is below the NATO target of 3.5% by 2035.
Critics, including Kemi Badenoch, argued the plan is insufficient and leaves a £5 billion funding gap, accusing Labour of cutting defence and increasing welfare spending. Starmer countered by criticizing the Conservative government's record on defence cuts and welfare spending increases.
Some insiders expressed concern over the funding gap, with one ally likening the plan to an 'unexploded bomb.' Starmer dodged questions about whether his expected successor, Andy Burnham, was aware of the funding shortfall when briefed on the announcement.