UK Chancellor Delays 3% Defence Spending Target, Reversing His Own Earlier Stance
New UK chancellor John Healey will wait until next year's spending review to set out when Britain will meet the goal of spending 3% of GDP on defence, the Treasury confirmed on 28 August. The announcement came as Healey prepares his first budget, scheduled for 28 October, which Treasury sources said would focus on fully funding the existing defence investment plan rather than setting a new timeline for the 3% benchmark.
GDP, or gross domestic product, is the total value of goods and services a country produces in a year. When governments talk about spending a percentage of GDP on defence, they are measuring military spending relative to the size of the overall economy. A spending review is a Treasury process that sets departmental budgets over several years.
The decision is a notable shift for a figure who, as defence secretary, was among the loudest voices calling for a firm date. In his resignation letter to then-prime minister Keir Starmer in June 2026, Healey wrote that he was "certain a headmark date for 3% of GDP on defence in 2030 is what Britain must set." Healey resigned as defence secretary that same month under Starmer's leadership and subsequently succeeded Rachel Reeves as chancellor when Andy Burnham became prime minister. Now, as chancellor, he has declined to set a date for the 3% target he previously insisted should be hit by 2030. In a Sky News interview, Healey said fiscal discipline was the "first priority" for any chancellor.
The Treasury confirmed there would be no further detail about the 3% defence timeline in the October budget. A spending review is expected next year, but no date has been set. A government spokesperson said the government will set out a pathway to meet the NATO commitment of 3.5% of GDP on defence by 2035 and set a target date to hit 3% at the spending review.
Prime Minister Andy Burnham has refused to commit to the 3% of GDP defence target, adding a political dimension to the fiscal delay. The three-year defence investment plan, one of Starmer's final announcements before leaving office, has approximately £1.2 billion a year left unaccounted for. The plan accompanied a £15 billion funding boost announced on 30 June 2026, intended to increase defence funding from £54 billion a year under the previous government to almost £80 billion a year by 2029. UK defence spending is on track to reach 2.7% of GDP by 2030, funded partly by Starmer's decision to cut the UK's aid budget.
The fiscal arithmetic is daunting. According to the Office for Budget Responsibility, raising UK defence spending to 3% of GDP by 2029–30 would cost an additional £17.3 billion annually. The gap between the current trajectory (2.7% by 2030) and the 3% ambition, combined with the £1.2 billion annual shortfall already identified in the existing investment plan, frames the chancellor's reluctance to commit to a date.
The broader trajectory of UK defence spending commitments has evolved across several government documents. The Spending Review 2025 stated defence spending would rise to 2.6% of GDP from 2027, with an ambition to reach 3% in the next Parliament when economic and fiscal conditions allow. The Strategic Defence Review 2025 set out an ambition to spend 3% of GDP on defence in the 2030s, again contingent on economic and fiscal conditions. The Defence Investment Plan, published on 30 June 2026, committed to increasing defence spending to 3% of GDP in the next Parliament, with funding and plans to be set out at the spending review. Prior to that, in February 2025, the prime minister announced defence spending would increase to 2.5% of GDP from April 2027, with an ambition to reach 3% in the next parliament.
The spending increases already in motion are substantial. A £5 billion technology investment announced in June 2025, described as a European first, included £2 billion in new funding contributing to defence spending rising to 2.5% of GDP from 2027. A new partnership between the defence sector and the private sector, backed by up to £250 million in government investment, was announced in April 2025. The UK launched a new body to harness innovative technology for the armed forces in July 2025, with a ringfenced annual budget of at least £400 million. In January 2026, the Ministry of Defence launched a team to back British small businesses, setting an SME spend target of an additional £2.5 billion through to May 2028.
Healey's own record on defence spending advocacy predates his chancellorship. As defence secretary, he said there was "no doubt" that UK defence spending would rise to 3% of GDP by 2034 at the latest, in remarks reported by the BBC in May 2025. Earlier, in July 2024, he said NATO members would need to go beyond the alliance's then-target of committing 2% of GDP to defence.
The international context sharpens the stakes. Germany plans to spend 3.7% of its GDP on defence, a higher level than the UK's planned 3% of GDP on core defence by the next parliament, expected in 2029. The NATO target itself has moved: the alliance now references a 3.5% of GDP commitment by 2035, which the UK government says it will set a pathway toward at the spending review.
The broader context here is that Healey's deferral serves several purposes at once. It buys fiscal room ahead of an October budget where the government must reconcile the £1.2 billion annual gap in the existing defence investment plan against broader spending pressures. It also shields Burnham, who has refused to commit to the 3% figure, from having to own a specific date before the fiscal picture is settled. The cost of delay, however, is credibility with allies: Germany's 3.7% trajectory and NATO's own 3.5% benchmark put the UK on the lower end of alliance commitments, and the gap between Healey's forceful advocacy as defence secretary and his caution as chancellor is one that allies and defence industry stakeholders will notice.
Healey is also planning to travel to North Carolina for a meeting of G20 finance ministers chaired by US Treasury secretary Scott Bessent, where the UK's fiscal and defence posture will likely be scrutinised against the backdrop of NATO spending expectations and transatlantic security commitments.
