The investment signals to its partners that the UK is committed amid a crunch time for European defence.

The UK will increase defence spending to 2.5% of GDP from 2027, providing an extra GBP13.4 billion a year.

The increase, announced by UK Prime Minister Sir Keir Starmer on 25 February at the House of Commons, comes ahead of a meeting with US President Donald Trump in Washington.

This is the “biggest sustained increase in defence spending since the end of the Cold War”, Starmer proclaimed.

The roadmap for reaching 2.5% of GDP on defence, up from the current 2.3%, was initially expected to be announced alongside the Defence Spending Review in the Spring. However, uncertainty over European security, following Trump’s recent criticism on Ukraine and Europe’s free riding, has spurred Starmer to announce this sooner.

During his speech, the prime minister also announced the government's intention to channel more investment into intelligence and security, bringing total spending to 2.6% of GDP from 2027. To fund this, the government will cut the overseas development assistance budget from 0.5% to 0.3% of GNI.

Along with this, a new National Security Strategy will be published ahead of the NATO Summit in June, Starmer added.

Discussions around increasing the NATO 2% of GDP threshold has been widely discussed this year, with some officials stating that 3% is a more suitable target to meet the growing security demands.

Recognising this, Starmer announced that his government will “set a clear ambition for defence spending to rise to 3% of GDP in the next parliament”.

Although this increase in investment is important, Starmer acknowledged that reform is also necessary: “We must seek value for money, and that is why we are putting in place a new defence reform and efficiency plan, jointly led by my right honourable friend the Chancellor, and the defence secretary”.

This aligns with the UK defence secretary’s speech on 18 February, in which he declared that defence would undergo its “biggest shake-up” in 50 years. 

The prime minister concluded by declaring that this is “not just about spending, our whole approach to national security must now change. We will have to ask British industry, British universities, British businesses and the British people to play a bigger part”.

The announcement signals that the UK is committed to European defence and security, especially to the US which has recently been critical of Europe’s free riding on defence spending. Nevertheless, given the need to strengthen the UK’s armed forces and support Ukraine, particularly if the US reduces support, questions arise as to whether 2.5% of GDP from 2027 is adequate.