UK Chancellor says tax rises needed to fund defence boost

Chancellor Rachel Reeves has indicated that tax increases are a likely option to fund a significant rise in British defence spending, ruling out further borrowing to meet the nation's security needs. Speaking at an investor conference in London on Tuesday, June 9, Reeves stated that the government must spend more on defence but must do so within constrained public finances.

Reeves said the money for defence has to come from somewhere and that borrowing cannot always be the answer. She argued that, despite the pain, raising taxes would be preferable to a scenario of climbing interest rates and a rising risk premium for the UK. The chancellor noted that defence spending is set to rise to 2.6 percent of GDP from next April and that pressures to increase funding are only going in one direction.

The statements come amid an ongoing internal debate over the government's long-delayed Defence Investment Plan, which is expected to be published before a NATO summit in Ankara, Turkey, next month. According to reports, Prime Minister Keir Starmer is poised to approve a £13.5 billion increase for the armed forces in an attempt to reach a 2.5 percent GDP target, with an announcement expected...