UK Prime Minister Keir Starmer announces £15bn defence spending increase funded by cuts to infrastructure projects

UK Prime Minister Keir Starmer has unveiled a £15 billion defence spending increase over four years, raising the annual budget to nearly £80 billion by 2029. To avoid borrowing, the uplift is funded by cutting capital budgets for transport, energy, and military housing. The plan prioritises high-tech modernisation, including a £5 billion drone initiative and a hybrid Royal Navy, while supporting 60,000 domestic jobs. The move aims to counter Russian threats and meet NATO spending targets.

£15bn defence spending increase

• ▪The UK Ministry of Defence aims to find £11 billion in efficiency savings by reducing its civil service workforce, cutting consultancy spending, and expanding technology use
• ▪The UK Treasury identified £10.3 billion in savings for the defence plan, leaving a £4.7 billion funding gap for the next prime minister to resolve in the autumn Budget
• ▪The UK defence budget is projected to reach 2.7% of GDP, or nearly £80 billion a year, by 2029 or 2030
• ▪UK Prime Minister Keir Starmer announced a £15 billion increase in defence spending over the next four years, raising the overall defence budget to almost £300 billion

Global security threats

• ▪The United States is demanding that European nations step up their defence contributions and become less reliant on Washington for security
• ▪The UK Defence Investment Plan warns of growing Russian aggression around UK shores, including Russian ships targeting critical underwater data cables

Infrastructure capital project cuts

• ▪The UK government adjusted a £9 billion military housing upgrade scheme so that its costs fall after 2030, helping to fund immediate defence priorities
• ▪The UK Department for Energy Security and Net Zero will cut £2 billion from its capital budget to help fund the defence spending increase
• ▪The UK Department for Transport is saving £700 million from roads projects, placing the A38 Derby Junctions and A46 Newark Bypass schemes under consideration for cancellation
• ▪The £15 billion defence spending increase will be funded by cutting the long-term capital investment budgets of other government departments by 1%

Military AI drone modernisation

• ▪The Royal Navy will transition to a hybrid fleet, utilizing self-controlled vessels and artificial intelligence alongside traditional warships
• ▪The UK will invest more than £5 billion over four years in drones and autonomous systems to modernise all branches of the armed forces
• ▪The UK will retire its Wildcat utility helicopters and Storm Shadow missiles early, phasing them out in favor of autonomous and next-generation replacements

Defence industry job creation

• ▪The UK Defence Investment Plan is projected to support the creation of almost 60,000 high-skilled, well-paid jobs across the United Kingdom
• ▪The UK is establishing a new £50 billion Defence Export facility to support British defence businesses in competing globally

NATO European defence responsibility

• ▪The UK will invest £8.6 billion in the Global Combat Air Programme to develop next-generation stealth fighter jets in partnership with Japan and Italy
• ▪The UK allocated £400 million for its contribution to the Multilateral Defence Mechanism to finance and procure defence equipment with allies
• ▪The UK Defence Investment Plan serves as a roadmap to increase military spending to NATO's target of 3.5% of GDP by 2035