The government’s Strategic Defence Review, published in June 2026, confirmed a commitment to raise UK defence spending to 2.5% of GDP by the financial year 2027/28, up from 2.3% in 2025/26. At current GDP projections, the increase represents approximately £6 billion in additional annual defence expenditure. Defence Secretary John Healey described the commitment as “the most significant increase in UK defence investment since the end of the Cold War.”
A National Audit Office analysis of the Ministry of Defence’s equipment programme, published in September 2026, concluded that there remained an £18 billion gap between the MoD’s committed equipment procurement obligations and its projected budget over the 10-year planning period to 2036. The NAO described the gap as “structurally unfunded” — meaning it could not be closed by the 2.5% commitment alone without either cancelling existing programmes or assuming GDP growth above current OBR forecasts.
What the Gap Means in Practice
The equipment programme gap affects several major procurement commitments: the next phase of the Type 26 frigate programme, the Tempest fifth-generation combat aircraft (being developed jointly with Italy and Japan under the Global Combat Air Programme), armoured vehicle replacement, and the nuclear warhead modernisation programme committed under the 2021 Integrated Review.
The NAO notes that the MoD has a history of equipment programme cost overruns: the 2025 NAO audit of major defence projects found an average overrun of 19% against original contracted cost across the 20 projects reviewed. Applying a comparable overrun assumption to current commitments would widen the gap further.
Personnel the Other Pressure
The armed forces are also under personnel pressure. Trained strength across the Army, Royal Navy, and Royal Air Force stood at 136,000 in July 2026, against an establishment target of 153,000 — a shortfall of 17,000. Recruitment campaigns launched in 2024 and 2025 have not closed the gap; retention bonuses introduced in 2026 have shown “modest early results,” according to MoD figures, but have not reversed the long-term trend.