UK commits nearly £300 billion to defence over four years, targeting 2.7% of GDP by 2028 and 3.5% by 2035

Summary

Britain's government published its Defence Investment Plan on June 30, committing nearly £300 billion (£298 billion) to defence over four years from 2026-27 to 2029-30, an average £3.8 billion per year above previously planned baselines. Prime Minister Keir Starmer framed the commitment as a direct response to the Iran war's exposure of European readiness gaps, with the trajectory set to reach 2.7% of GDP by 2027-28, 3% in the following parliament, and 3.5% by 2035 in line with the NATO Hague summit target. Priority lines include Royal Navy surface combatants built at Scottish and Tyneside yards, a long-range strike arsenal restocked after Operation Epic Fury depleted existing stocks, and a new space domain command. The announcement came 19 days after Defence Secretary John Healey resigned on June 11, saying the Treasury was "unable" to commit the resources the security situation required; Dan Jarvis, a former Army major, replaced him. The plan, published eight days before the NATO Alliance summit in Ankara, is calibrated to show Washington that London is leading European Defence Spending Surge efforts.

The split

The UK government frames the plan as strategic necessity and industrial opportunity, citing tens of thousands of manufacturing jobs in constituencies that returned Labour MPs in 2024. Conservative opposition argues the target is a repackaging of previously announced spending with new borrowing classified as capital investment to sidestep fiscal rules. The IFS identified that about a third of the annual increase, roughly £1.2 billion per year, has no identified funding source, with a decision deferred to the autumn Budget, and estimated that reaching 3.5% by 2035 will require an additional ~£25 billion per year in today's terms beyond the plan. Healey's own resignation is the most pointed critique: the man responsible for defence spending said the settlement "falls well short." NATO Secretary-General Rutte welcomed the plan as "a good step" toward the 3.5% Hague target.

By the numbers

• £298 billion, total four-year commitment (2026-27 to 2029-30)
• £3.8 billion, average annual increase above previous baselines
• ~£1.2 billion/year, portion with no identified funding source (IFS estimate)
• 2.7% of GDP, target by 2027-28 (up from ~2.3% in 2025)
• 3.5% of GDP, UK target by 2035 (matching the NATO Hague summit commitment)
• 8 days, gap to the NATO Ankara summit

Why it matters

The UK is the first major European power to publish a detailed four-year defence spending commitment since the Iran war reset threat perceptions across NATO. The IFS's unfunded-portion finding means the autumn Budget will be the real test of whether the plan holds. The Healey resignation is a significant political signal: the Cabinet minister who would have implemented the plan judged it insufficient. The announcement concentrates a large share of NATO's future industrial output in BAE Systems and Rolls-Royce supply chains, giving UK industry outsize leverage over European readiness for the next parliament. It also directly feeds the Defence Spending Surge tracker.

What to watch

• The autumn Budget: how the £1.2 billion/year funding gap is filled (tax rises, cuts elsewhere, or borrowing)
• Whether France and Germany match or exceed the 3% trajectory at the Ankara summit on July 7-8
• First contract awards under the shipbuilding line, expected in late 2026
• Trump's reaction: he has demanded 5% from European allies, so 2.7%-3% may still draw American pressure
• The Labour leadership result (due August 29): the incoming PM will decide whether to honour the DIP fully, renegotiate the unfunded portion, or defer to a post-election spending review
• Dan Jarvis's implementation of the plan his predecessor resigned over