Rachel Reeves has said UK companies and jobs will be prioritised under the government’s plans for a significant increase in defence spending, with an aim to support “left behind” industrial towns and the economy at large.
Announced by Keir Starmer last week amid growing fears over Donald Trump’s commitment to European security, the government will increase defence spending to 2.5% of GDP by 2027 – worth an additional £6bn a year.
With European leaders scrambling to strengthen their military capabilities, the chancellor said the spending would also benefit jobs and growth in Britain as the state sought to spend more money with UK-based defence companies.
“I do want to make sure as we spend more on defence that is used to support British jobs and British industries. That’s why I met on Friday with UK defence companies and companies operating in the UK to work on how we can increase the capacity and the capability,” she said.
“I am determined that as we spend that money on that defence and security, that we use it in a way that can also help stimulate the economy, and particularly to revive some parts of the country that do often feel like they’re left behind.”
Speaking at a conference in London on Tuesday held by the manufacturing trade body Make UK, Reeves ducked questions from the media about whether Britain could still trust the US as a military partner under Trump’s administration.
The UK’s nuclear weaponry relies heavily on cooperation with the US, as does an array of other British military hardware including F-35 fighter jets and Apache attack helicopters.
“The UK and the US in terms of security and defence are closely intertwined, they are our closest partners on defence and security and that will continue to be the case,” she said.
It comes after MPs reacted with fury after JD Vance appeared to describe a proposed Anglo-French peace deployment to Ukraine as “20,000 troops from some random country that has not fought a war in 30 or 40 years”.
Reeves also suggested the UK would not withdraw from a close military industrial relationship with the US.
“We’ll always have a need to buy things from abroad. I don’t want to pull up the drawbridge. But as we spend more on defence I want to see that benefit for the UK economy and UK jobs.”
Britain spent £32bn directly with UK and overseas industry, with most spent on domestic contracts, and outside London and the south-east. However, billions of pounds is also spent with foreign governments, including the US.
Alongside additional defence spending the chancellor is also preparing to retool the £27.8bn National Wealth Fund, which had primarily been earmarked for green projects, so it can also be spent on defence.
Reeves also said Britain’s economy will be hurt by a G7 trade war even if Trump exempts the UK from tariffs.
“It’s absolutely the case that even if tariffs aren’t applied to the UK, we will be affected by slowing global trade, by a slower GDP growth and by higher inflation than otherwise would be the case,” she said.
“I’ve always been really clear that I believe strongly that free trade is good for exporters and importers for both countries on the sides of a trade deal. So I don’t want to see tariffs increased. I don’t think it serves anyone well.”
Source: theguardian.com
