Key facts
- New defence investment to be announced in the Budget.
- Investment to be generated by long-term borrowing.
- Conservatives demand Healey resign if 3% of GDP defence spending target is not funded.
- UK currently spends around 2.6% of GDP on defence.
UK Chancellor John Healey is expected to announce significant new defence investment in the upcoming Budget, funded through long-term borrowing. The funds will be channeled into the National Wealth Fund and British Business Bank to invest in British defence companies, aiming to generate jobs and economic development. This move comes amid pressure from the Conservatives, led by Shadow Chancellor Andrew Griffith, who are demanding Healey resign if the government fails to outline a clear plan to increase defence spending to 3% of GDP by 2030. Healey himself previously set this target and had resigned from his role as Defence Secretary over the Treasury's perceived unwillingness to fund it. The current UK defence spending stands at approximately 2.6% of GDP, with Nato allies committed to 3.5% by 2035. The Office for Budget Responsibility estimates that reaching 3% would require an additional £17.3 billion in 2029-30.