UK Defence Spending: Nato Warns of Gap Ahead of 2027 Target | City A.M.

Sir Keir Starmer’s ambition to bolster the UK’s armed forces is facing increased scrutiny as new figures from Nato suggest the country is falling behind on key spending targets. The alliance estimates UK defence expenditure at just over 2.3% of GDP in 2025, below both Starmer’s pledged 2.6% for 2027 and Nato’s previous projection of 2.4% for 2025.

The discrepancy, revealed on Thursday, adds to mounting pressure on the government to maintain its financial commitments to defence, particularly as economic conditions fluctuate and GDP growth remains uncertain. The UK government currently defines cash settlements for the Ministry of Defence until 2029, but the evolving economic landscape threatens to undermine these plans.

Nato’s assessment comes amidst growing concerns within the defence industry about delays in the publication of the Defence Investment Plan (DIP). This crucial strategy document, originally slated for release last autumn, outlines long-term investment in defence projects. The delay, coupled with reports of a potential £28 billion shortfall in MoD funding over the next four years, has left defence manufacturers in a state of “paralysis” and “bleeding cash,” according to recent reports. Several firms are reportedly facing bankruptcy as they await clarity on future contracts.

Starmer acknowledged the challenges surrounding the DIP on Monday, admitting that securing funding remained a key obstacle. “We have to make sure the investment we need is going in and it is sustained over a 10-year period in accordance with the strategic review,” he stated. The Labour leader’s pledge to increase defence spending to 2.6% of GDP from 2027 was made last year, but achieving this target will require navigating potential headwinds from inflation and shifts in the overall economic output.

The situation is further complicated by Nato’s longer-term goals. Members of the transatlantic military alliance have agreed to increase defence spending to at least 3.5% of GDP by 2035. However, the Office for Budget Responsibility (OBR) recently warned of a £6 billion gap in UK expenditure plans if the government pursues a linear path towards this target. This suggests that reaching the 3.5% goal will require either increased investment or a recalibration of expectations.

Chancellor Rachel Reeves, in her Spending Review last year, affirmed the government’s commitment to meeting the 2.6% target in 2027, while expressing an “ambition” to reach three per cent after 2029 “when economic and fiscal conditions allow.” This conditional approach reflects the inherent uncertainties in long-term economic forecasting and the potential for competing budgetary priorities.

A Ministry of Defence spokesperson defended the UK’s defence spending, stating that the country is “one of the top defence spenders of all NATO nations” and has increased spending by almost £9 billion since 2023. The spokesperson also highlighted the UK’s commitment to Nato, including its nuclear deterrent and the provision of armed forces for alliance missions. The MoD maintains that the UK has consistently met its Nato spending commitments.

The ongoing debate over defence spending underscores the complex interplay between political ambition, economic realities, and international obligations. As the UK navigates a challenging geopolitical landscape, maintaining a credible and well-funded military will be crucial for both national security and its role within the Nato alliance. The coming months will be critical as the government seeks to address the funding gaps and deliver on its promises to modernize and strengthen the armed forces.