Defence plan leaves £5 billion funding gap for next budget
Britain’s defence reset adds £15 billion, but almost £5 billion is still unfunded. That gap now shifts the tax, borrowing or cuts debate to the next budget.
Britain’s new Defence Investment Plan promised £15 billion of extra defence spending and a total of £298 billion over the next four years, but it also left almost £5 billion still to be found. The government says the package will push defence spending to 2.5% of GDP from 2027 and direct more than £5 billion into drones and autonomous systems.
Keir Starmer unveiled the plan in Maidenhead on 30 June, ahead of the NATO leaders’ summit in Ankara on 7-8 July. Downing Street has cast the document as a summary of major investment choices rather than the full defence budget or a complete account of British military capability, and the emphasis is on accelerating innovation, adapting to fast-changing warfare technology and supporting jobs in the UK defence sector.
The politics, however, now sit on top of a funding problem. Almost £5 billion of extra money still has to be found later, and defence chiefs had wanted far more, with some reporting putting the shortfall against their ask at £28 billion. John Healey has warned that the plan still leaves Britain unsafe, underscoring how quickly the debate has moved from announcement to accounting.
That is the bill coming due for the next budget. If Andy Burnham becomes prime minister next month, he would inherit the same pressure and face a choice that cannot be avoided: raise taxes, borrow more, or cut spending elsewhere to cover the defence commitment. The argument is no longer about whether Starmer could launch a bigger defence posture; it is about who pays for it once the political headlines fade.
The wider fiscal backdrop makes that choice harder. The Office for National Statistics said public sector net borrowing reached £23.3 billion in May 2026, £5.4 billion more than a year earlier and £5.6 billion above the Office for Budget Responsibility forecast. With annual defence spending expected to rise to about £79 billion by 2029, the next government will have to turn a strategic pledge into a set of hard budget decisions.
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