MNI BRIEF: UK Spending Plans Set Out, Defence Sees Boost

UK Chancellor of the Exchequer Rachel Reeves on Wednesday set out departmental spending allocations for the next three years and capital spending for four years in the Spending Review, saying that defence spending, including intelligence agencies will rise to 2.6% of GDP by April 2027.

Reeves did not address directly the NATO aim to get defence, and defence related, spending up to 5% of GDP.

The Spending Review itself is not designed to contain fresh revenue-raising or spending commitments but to allocate the spending envelope set in the Spring, leaving financial markets to focus on how credible, and sustainable, the detailed spending plans. As long as a government does not set a target date for the NATO defence spending rise it will not feature in the current Budget arithmetic. (see MNI INTERVIEW:  Private Cash To Partly Fund UK Defence Boost )

Reeves noted that total departmental budgets were projected to grow by 2.3% a year in real terms over the next three years, reiterating that her fiscal rules, for current balance budget and getting debt on a downward path, were "non-negotiable".