UK to Increase Defence Spending by £15 Billion Over Four Years, Funded Partly by Cuts Elsewhere

The UK government will increase defence spending by £15 billion over the next four years under the Defence Investment Plan. The Treasury table shows the annual rise averages £3.75 billion compared with prior plans through 2029-30. Prime Minister Sir Keir Starmer described the plan as a historic shift.

Around £1.2 billion of the yearly increase remains unfunded and will be detailed in the Budget later this year. The Treasury will meet part of the cost by cutting capital budgets across other Whitehall departments by 1 percent, generating £1 billion a year.

Additional savings include £500 million annually from the energy department and £200 million from the transport department through reduced road investment.

Public sector asset sales are expected to raise £275 million a year on average. Another £600 million a year will come from Treasury support for international objectives and more efficient defence procurement, including a shift of future Ukraine commitments from the Ministry of Defence if a ceasefire occurs.

Efficiency measures target automation of 20 percent of the MoD's human resources and finance functions by 2028, £50 million yearly from accelerated artificial intelligence use, and roughly £1 billion annually from defence acquisition reforms.

Total departmental spending is projected at £678 billion in 2026/27, while tax revenues are forecast at £1,170 billion. The 2026 Spring Statement left the Chancellor £24 billion in headroom against the fiscal rule. The Institute for Fiscal Studies estimated that extending the fuel duty freeze to 2029-30 would cost around £5.5 billion a year.