Chris Hague
Senior Policy & Comms Manager, Make UK Defence
Spending more on defence is both a national security imperative and an economic opportunity, but there’s still a lack of clarity on how to achieve this.
At last year’s NATO Summit in The Hague, allies agreed to raise core defence spending to 3.5% of GDP by 2035, alongside an additional 1.5% for national resilience. This historic commitment reflects a more dangerous world following Russia’s illegal invasion of Ukraine in 2022, but also growing instability in the transatlantic relationship, from rising tariffs to disputes over Greenland and divisions over US policy towards Iran.
The UK must respond with a serious increase in defence spending. Yet this isn’t only a national security imperative; it’s also an economic opportunity. More than seven in ten UK defence jobs are based outside London and the Southeast, meaning the defence sector is uniquely positioned to support growth in post-industrial, rural and coastal communities.
Call for a clear fiscal roadmap
To seize this opportunity, the Government must provide industry with certainty. Ministers have committed to spending 2.6% of GDP on defence by next year and expressed an “ambition” to reach 3% in the next Parliament.
But businesses cannot make major long-term investments based on ambitions alone. A clear fiscal roadmap to 3.5% by 2035 is essential to unlock private capital, strengthen supply chains and expand the UK’s industrial base.
A clear fiscal roadmap to 3.5% by 2035 is essential to unlock private capital, strengthen supply chains and expand the UK’s industrial base
Credible ways to achieve 3.5% GDP for defence
Make UK Defence has backed the proposed Defence, Security & Resilience Bank (DSRB), an idea supported by Canadian Prime Minister and former Bank of England Governor Mark Carney, as a mechanism to help finance higher defence spending across the UK and NATO allies.
The Government should also learn from history. During the Second World War, Britain raised the equivalent of more than £100 billion through war bonds. A modern defence bond, ringfenced for investment in R&D, innovation and export-focused capabilities, could mobilise significant new funding while supporting economic growth.
The UK is in a global race for private defence investment. Without a clear pathway to 3.5% of GDP, we risk losing that investment to our competitors.
