UK targets raising defense budget to 3.5% of GDP, NATO welcomes move

NATO Secretary General Mark Rutte welcomed Britain’s commitment to boosting defense spending yesterday, describing its role in ensuring security across both sides of the Atlantic as “vital.” In a post on the X platform, Rutte said the announcement of the new budget by British Chancellor of the Exchequer John Hiley represented good news, praising the strong commitment to defense it entailed. He added that this step places Britain on a reliable path to fulfilling the pledge made by all NATO allies at The Hague summit to ensure the necessary investments are allocated to maintain readiness, deter aggression, and defend freedom and security.

Earlier, speaking to members of the House of Commons (the lower chamber of Parliament) while presenting the details of the state budget, Hiley affirmed that Britain is committed to raising defense spending to 3.5% of GDP, confirming that details on how to achieve this would be revealed during the security and defense review scheduled for next year. He noted that the current defense budget has increased by £14 billion ($18.6 billion) compared to the 2023–2024 fiscal year, explaining that the government is also working to increase private investment in defense, including through public-private partnerships.

In parallel, the state budget included a wide range of measures aimed at mitigating the impact of the cost-of-living crisis and rising prices for essential goods and services, particularly energy and fuel. Hiley emphasized that 20 million households would receive a direct payment of £100 (approximately $133) in the coming weeks to help lower energy bills, and that the freeze on car and electricity duty would be maintained until July next year. He stated that 2.3 million employees would receive a salary increase of about 3.9%, while retirees would be exempt from paying tax on any additional income, provided it is equal to or less than the value of their pension.

Hiley pointed out the government’s decision not to reduce the value of tax-free individual savings, keeping it at £20,000 ($26,570), while raising the minimum threshold for business rate relief for small enterprises in retail, hospitality, and leisure sectors from £12,000 (approximately $16,000) to £18,000 (approximately $24,000), thereby exempting around 70,000 small companies from these charges. On the other hand, he revealed that £430 million ($571.3 million) would be allocated to address homelessness, but warned that the government would have to pay an additional £14 billion ($18.6 billion) in debt interest.