In January 2024, the Prime Minister announced that the UK would increase defence spending to 2.5% of GDP — a commitment framed as a response to the changed security environment following Russia’s invasion of Ukraine. The commitment was given a target date of 2027. Analysis of current spending levels, GDP projections, and MOD budget plans shows that meeting the commitment requires approximately £4.7 billion in additional annual spending above the current baseline. The question of where this money comes from has not been clearly answered.
The Numbers
UK defence spending in 2024/25 was approximately £59.6 billion, representing approximately 2.3% of GDP. To reach 2.5% of GDP by 2027, the UK would need to spend approximately £64.3 billion in that year — based on OBR GDP forecasts published in March 2025. The gap between the current trajectory and the 2.5% target is approximately £4.7 billion annually at 2027 GDP levels.
The commitment is expressed as a percentage of GDP, which means that changes in GDP affect the absolute spending required. If GDP grows faster than projected, the absolute amount needed increases. If it grows more slowly, the amount decreases. The OBR’s central forecast was used in this analysis; downside scenarios would reduce the gap, upside scenarios would increase it.
Where the Money Is Expected to Come From
The government’s Spending Review 2025 allocated increased resources to the Ministry of Defence as part of a “national security premium.” The MOD’s Departmental Expenditure Limit was increased, but the published figures do not close the full gap to 2.5% in 2027 under the central GDP scenario. HM Treasury’s interpretation of what counts toward the 2.5% figure — whether it includes spending by other departments on security-adjacent functions — has been the subject of parliamentary questions that have not received fully transparent answers.
The Defence Select Committee published a report in April 2025 noting that the trajectory of planned spending “does not, on current projections, reach 2.5% of GDP by 2027 on any credible accounting basis that excludes non-core items.” The government’s response was that it remained “committed to the 2.5% target” and that specific figures would be set out in future spending reviews. The Committee described this response as “inadequate.”
What 2.5% Would Fund
The MOD’s own published analysis of capability gaps — including the Strategic Defence Review published in 2024 — identifies several areas requiring investment: maritime patrol and submarine capabilities; long-range precision strike; air defence; and the equipment and readiness of the land forces. The Defence Select Committee and external analysts have noted that the investment requirements identified in the SDR exceed what would be funded even at 2.5% of GDP.
NATO allies’ spending levels provide context. Poland now spends approximately 4% of GDP on defence; the Baltic states 3-4%; the United States approximately 3.5%. The UK’s 2.5% target, while above the formal NATO minimum of 2%, represents a relatively modest commitment compared to the European allies most directly exposed to the Russian threat. Several NATO partners have called for the formal minimum to be raised to 2.5% or 3%, which would reframe the UK’s current commitment as meeting a floor rather than exceeding it.
The Procurement Problem
Spending more money does not automatically translate into improved capability — the MOD’s procurement record means that additional budget faces the risk of being absorbed by programme cost growth and delays rather than delivering new capability. The NAO’s most recent assessment of the MOD Equipment Plan found a funding gap of approximately £17 billion over ten years in the existing programme — a gap that exists before the additional capability investment implied by 2.5% is factored in.
MOD told Exposed News: “The government is committed to spending 2.5% of GDP on defence and is taking the steps needed to achieve this target. Investment in defence is an investment in our national security and in the safety of our citizens. The Strategic Defence Review sets out a clear plan for how we will modernise and strengthen our armed forces.”