Raise defence spending to 3 percent

Spending baseline

Commons Library data put defence spending at GBP 60.2bn in 2024-25, rising to GBP 73.5bn in 2028-29. Moving to 3 percent of GDP by then requires a large additional increase.

• Central cost is about GBP 19bn in 2028-29.
• Aid and welfare savings may be claimed as funding.
• Procurement capacity is a major constraint.

Core trade-offs

Defence capability and industrial capacity may improve. The taxpayer bears a large recurring spending increase, and value depends on procurement quality, workforce capacity and avoiding inflationary bottlenecks.

• Armed forces and suppliers gain funding.
• Other spending or taxpayers bear the cost.
• Procurement efficiency determines value.

Fiscal impact by 2028-29

+GBP 12.0bn to +GBP 30.0bn. Central estimate: +GBP 19.0bn.

• Positive numbers mean net fiscal cost; negative numbers mean Exchequer savings.
• Main cost is additional defence spending.
• Activity receipts recover only a small share.
• Procurement capacity affects value for money.
• This is not an official costing.

Economic impact by 2028-29

• Jobs: Defence employment and supply-chain jobs rise, with skill shortages possible.
• Wages: Wages may rise in defence manufacturing and engineering bottlenecks.
• Prices: Procurement inflation likely if capacity is tight.
• GDP / productivity: Demand rises, but productivity gains depend on innovation spillovers and procurement quality.

Assessment

The fiscal direction is clear: 3 percent of GDP means a large recurring increase unless offset by credible cuts elsewhere. Defence R&D can create spillovers, but rushed procurement can also waste money and bid up scarce skills.

Confidence: Medium-low. Baseline spending is clear; GDP level, NATO definition and procurement deliverability drive uncertainty.

Main risks

• Procurement waste: Rapid spending increases can raise prices without proportionate capability.
• Skills bottleneck: Engineering and manufacturing capacity may constrain delivery.
• Funding gap: Aid or welfare savings may not fully materialise, leaving borrowing higher.

Safeguards

• Publish NATO and departmental definitions separately.
• Phase spending through audited procurement plans.
• Track domestic capacity and unit-cost inflation.

Academic evidence

UK government evidence

Sources

• PolicyLens methodology: Raise defence spending to 3 percent Internal - PolicyLens, 2026
• UK defence spending Parliamentary briefing - House of Commons Library, 2025
• UK aid: Reducing spending to 0.3% of GNI by 2027/28 Parliamentary briefing - House of Commons Library, 2026
• Economic and fiscal outlook: March 2026 Fiscal forecast - Office for Budget Responsibility, 2026
• Can Government Purchases Stimulate the Economy? Academic article - Ramey, Journal of Economic Literature, 2011
• The Intellectual Spoils of War? Defense R&D and Innovation Academic article - Moretti, Steinwender and Van Reenen, Quarterly Journal of Economics, 2023
• Macroeconomic Effects from Government Purchases and Taxes Academic article - Barro and Redlick, Quarterly Journal of Economics, 2011
• Our Plan for Britain Party policy source - Conservative Party, 2026

Other Conservative policies

• Cut welfare spending by GBP 23bn
• Cut 132,000 Civil Service posts
• Create a 150,000-removals force
• Restrict social housing to UK nationals
• Cut overseas aid by GBP 7bn
• Cut net-zero subsidies by GBP 1.6bn
• Abolish stamp duty on main homes
• Abolish rates for high-street firms