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The Prime Minister has committed to spend 2.5% of the UK’s gross domestic product (GDP) on defence by 2027. This is three years earlier than the commitment made under the previous Conservative government.

As a member of NATO, the UK is committed to spending 2% of GDP on defence expenditure that meets NATO’s definition. The latest NATO estimates show that the UK spent 2.3% of GDP on defence in 2024.

This Insight covers what the Prime Minister announced, how defence spending is defined and what this increase in spending means.

What did the government announce?

On 25 February 2025, Prime Minister Sir Keir Starmer made a statement to the House of Commons. The statement committed the UK to spend 2.5% of its GDP on defence by 2027 and indicated plans to further increase spending to 3% in the next Parliament. He said it was “the biggest sustained increase in defence spending since the end of the cold war.”

The previous Conservative government, and Labour in its general election manifesto, committed to raise defence spending to 2.5%, although the Conservatives aimed to reach this by 2030.

The Prime Minister said the government would “fully fund our increased investment in defence” by reducing aid spending from 0.5% of gross national income (GNI) to 0.3% in 2027. The Institute for Fiscal Studies think tank estimates that further taxes or spending changes would be required to increase spending to 3% of GDP.

What counts as defence spending?

When defence spending targets are discussed as a percentage of GDP, this usually relates to spending that meets the NATO definition of defence expenditure, rather than total departmental expenditure by the Ministry of Defence (MOD). The NATO definition is a broader measure of defence spending than MOD expenditure, meaning the NATO figure is higher than the departmental spending plans, such as those set out in the Autumn Budget 2024.

Defence expenditure is defined by NATO as payments made by a national government (excluding regional, local and municipal authorities) specifically to meet the needs of its armed forces, those of its allies or of the NATO alliance.

Most of NATO defence expenditure comes from the MOD budget. But some of the additional NATO-qualifying spending sits outside the MOD budget, including parts of the single intelligence account, Armed Forces pensions and the Integrated Security Fund.

The definition is agreed by all NATO allies and is regularly reviewed, most recently in 2024.

Including security and intelligence within the definition

In the accompanying press release the Prime Minister also said the “definition of defence spending will be updated to recognise what our security and intelligence agencies do to boost our security, as well as our military”. Considering this, the Prime Minister said it would mean the UK would be spending 2.6% of GDP on defence from 2027.

The Spring Statement 2025 sets out that the total department funding of the single intelligence account would be £4.6 billion in 2025/26.

The single intelligence account funds the security and intelligence agencies:

  • the Secret Intelligence Service (MI6)
  • Government Communications Headquarters (GCHQ)
  • the Security Service (MI5).

The 2% NATO target

The target that NATO member states would spend 2% of their national GDP on defence expenditure was set at the 2006 Riga Summit. However, despite all NATO members agreeing to the guideline, few countries adhered to it before 2014.

Russia’s annexation of Crimea in 2014 drew attention to the declining defence budgets of most NATO members. At the NATO summit in Wales that year, member states agreed to reverse the trend and aim to spend 2% of GDP on defence by 2024.

According to the NATO definition, the UK has spent over 2% of GDP on defence each year since 2014, as shown in the chart below. It is estimated that 23 out of 32 NATO member countries (including the UK) met this target in 2024.

From 2014 to 2024, the UK has spent over 2% of its GDP on defence using the NATO definition. In 2024, NATO estimated that the UK spent £64.6 billion, which was around 2.3% of GDP.
Source: NATO, Defence Expenditure of NATO Countries (2014-2024), 17 June 2024, tables 1 and 3

How much will the increase cost?

The Prime Minister said increasing defence spending to 2.5% would mean “spending £13.4 billion more on defence every year from 2027”. Darren Jones, the Chief Secretary to the Treasury, subsequently explained this refers to NATO-qualifying defence spending.

Some questioned the £13.4 billion figure such as Ben Zaranko, associate director of the Institute for Fiscal Studies and the fact-checking charity, Full Fact. They found that the £13.4 billion figure is an increase in comparison to the current defence budget (2024/25). Maria Eagle, the Minister for Defence Procurement, has since confirmed the £13.4 billion increase is in “cash terms in 2027-28 compared to 2024-25”.

In 2024/25, defence spending was around 2.3% of GDP, according to the NATO definition. The government has forecasted that it will be spending an additional £6.4 billion on defence in 2027 to reach the 2.5% target, as shown in the chart below. This is based on the assumption that defence spending would otherwise have remained at 2.3% of GDP.

The OBR has estimated that reaching 3% of GDP by the next parliament would cost an additional £17.3 billion in 2029/30.

The government has forecasted that it will be spending an additional £6.4 billion on defence in 2027 to reach the 2.5% target. This is based on the assumption that defence spending would otherwise have remained at 2.3% of GDP.
Notes: Defence expenditure from 2025 based on Treasury counterfactual that defence spending would otherwise have remained at 2.3% of GDP

Source: Library calculations, based on NATO, Defence Expenditure of NATO Countries (2014-2024); Office for Budget Responsibility, Economic and fiscal outlook – March 2025, 26 March 2025, economy detailed forecast table 1.2; HM Treasury, Spring Statement 2025, 16 March 2025, table 2.1

What was announced at the Spring Statement 2025 for defence spending?

In the Spring Statement 2025, the Chancellor Rachel Reeves repeated the 2.5% commitment and ambition to spend 3% in the next parliament. Towards this, the Chancellor announced the MOD would receive an additional £2.2 billion in 2025/26. The Treasury has said this will take spending on defence to 2.36% of GDP next year.

In the statement, the Chancellor committed to:

  • Spending at least 10% of the MOD’s equipment budget on novel technologies (such as drones and AI enabled technology)
  • Creating a ringfenced budget of £400 million for UK Defence Innovation (UKDI), a fund under the MOD. The UKDI was announced in March 2025.
  • Providing £200 million for job creation in its Plan for Barrow, “a town at the heart of our nuclear security”
  • Providing £2 billion of increased capacity for UK Export Finance “to provide loans for overseas buyers of UK defence goods and services”

In his response, the Shadow Chancellor Mel Stride said he welcomed the commitment, but said the 3% target should be brought forward to this parliament.

Further information

More information on defence expenditure can be found in the Library briefing on UK defence spending.

About the author: Niamh Foley is a statistics researcher at the Commons Library.

Image: TheStockCube via Adobe Stock