Reeves hints at tax rises to fund Britain’s defence spending boost

10 June 2026 , 11:31

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Reeves hints at tax rises to fund Britain’s defence spending boost

Rachel Reeves has indicated the government could raise taxes to fund an increase in defense spending, amid growing concerns over Britain’s struggling military in the face of mounting global threats.

The chancellor ruled out borrowing more to fund the government’s multibillion-pound defense investment plan - expected to be published in the coming weeks - instead indicating that she would rather raise taxes and warning that pressures to fund defense are “only going in one direction.”

Speaking at the annual Peel Hunt FTSE 250+ Conference in London on Tuesday, the chancellor said: “We are in a constrained fiscal world, and I think we’ll be honest about that, and we’re going to have to spend more on defense.”

“I would argue that despite the pain of higher taxes, it’s better to do that than to get into a situation that we were in before, where we had climbing interest rates and the risk premium for the UK was climbing too,” she said.

Ms. Reeves added: "The first duty of the government is to keep its people safe, and in the world in which we live today, it’s increasingly clear that the US and other European countries are going to have to spend more on defense, but crucially spend that money better.

“The money has to come from somewhere, and borrowing cannot always be the answer.”

The government has said the Defense Investment Plan (Dip), which will detail long-term funding and strategy for the armed forces, will be published before the NATO summit in Ankara, Turkey, next month.

Last week, Sir Keir Starmer insisted the plan would be “another step up” in the amount of money spent on arming the country, insisting that defense was the UK’s “top priority” when asked whether other government departments will need to make cuts to pay for the boost.

According to the Times, No 10 has reportedly bypassed the Treasury to tell departments directly to find 1 percent cuts to their capital budget over the next four years, which are used to fund infrastructure and investment, in order to meet the defense commitment.

This comes after the former head of the Royal Navy warned that Britain’s armed forces are on the “brink of disaster” because of a lack of investment.

Lord West of Spithead, who led the force for four years in the early 2000s, said the government should make clear how it was going to get the money for the upcoming Defense Investment Plan.

He was among several peers who criticized the state of the armed forces, as their former head, Lord Stirrup, warned an inadequate announcement on funding would continue decades of “hollowing out” of the services.

Thomas Brown

Head of Investigations