Starmer can only hope aid grab-raid to lift defence budget wins Trump's favour

The Guardian

25-02-2025

Before Keir Starmer's meeting with Donald Trump on Thursday, the prime minister thought it necessary to offer the president a gift. Britain's defence spending will increase by 0.17 percentage points to 2.5% of GDP by April 2027, he told MPs in a hastily arranged Commons statement. The money, he added, would be taken directly from the overseas aid budget, whose level will be cut by nearly half to 0.3%.
The last measure is a remarkable turn for a Labour government. Uncomfortably, it comes at a time when Donald Trump wants to shut down perhaps the entire $40bn US aid budget – and at a stroke eliminates a signature commitment from the Blair-Brown years. It was back in 2004, when Tony Blair was prime minister, that Labour first committed to increasing aid spending to 0.7% of GDP.
The figure was eventually achieved under David Cameron in 2013, though it was cut to 0.5% in the response of the pandemic. Now is to be slashed again under Labour, amid a soft Trumpian observation by the prime minister to MPs that 'in recent years, the development budget was redirected towards asylum', though this may prove to be the hardest part of the aid budget to squeeze.
Cutting aid was 'not an announcement I am happy to make', Starmer emphasised, though the manoeuvre was probably deemed to be the easiest way to promise an immediate cash injection into defence without raising more politically troubling questions over tax and borrowing.
This year, 2024-25, the UK will spend £66.3bn on defence, according to the Ministry of Defence. According to estimates produced by the Institute for Fiscal Studies thinktank, by 2027 the shift in spending to 2.5% of GDP would amount to a straight switch of £5.3bn from the aid budget to defence.
Starmer, however, told MPs the increase would amount to £13.4bn extra for defence, slightly confusing the number crunchers at the thinktank. No document was released by Labour with details of the spending commitment – a notable contrast to last April when the then prime minister, Rishi Sunak, set out defence budgets year on year until 2030 as an election loomed. Another clue, perhaps, the decision was taken quickly.
'Our best guess,' wrote Ben Zaranko of the IFS, 'is that it's the extra spending relative to a world where defence spending stayed flat in cash terms. That is, we'll be spending £13.4bn more in 2027-28 than if the defence budget were frozen between now and then.' It was in other words, a figure that can best be described as exaggerated, or as Zaranko put it: 'It's not a nonsense number. But …'
Subsequent briefings showed that the IFS's hunch was correct. The defence budget is expected to be £79.7bn in 2027-28 on current Treasury forecasts, defence sources indicated, £13.4bn more than the year's £66.3bn.
Nevertheless, even at the more accurate lower figure, an extra £5.3bn for defence in real terms should be a significant amount. But while overseas aid programmes may have to be axed, it is not obvious what extra capability in defence it will buy. Starmer did not have any suggestions for MPs, deferring that to the continuing strategic defence review, which will now merge into a national security strategy and finish by June.
Defence, meanwhile, continues to struggle with overspending and unrealistic ambition. Service heads have been privately warning for months that political commitments, including Labour's Nato-first strategy plus the multi-country Aukus nuclear-powered submarine programme and the Gcap combat air initiatives, cannot be afforded. There is a £16.9bn deficit of unfunded commitments in the MoD's 10-year equipment plan, and defence insiders warn of a £3bn shortfall on next year's budget.
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Nevertheless, though the prime minister's announcement was budgetary, the realities of the moment are immediate and political. Starmer needs Trump's help. A fissure has opened up between the US and Europe at bewildering speed this month, with Trump seemingly intent on imposing a peace on Ukraine in a private dialogue with Russian president Vladimir Putin and insisting that European militaries police whatever agreement he tries to come up with.
Though Britain and France have indicated they are willing to help lead the creation of a multinational 'reassurance force' to protect Ukraine's critical infrastructure – if that is what emerges from the US-Russia talks – Starmer says it is not viable without the backstop of US air power, held in reserve to strike out if Russia were to try to attack Ukraine and its peacekeepers again.
It is a moment where Britain wants and needs transatlantic support. Though there was no immediate comment from Trump, who has endlessly called for European nations to increase their defence budgets, his secretary of defence, Pete Hegseth, was upbeat after he was briefed on the news. 'A strong step from an enduring partner,' the Pentagon chief said, and with so much at stake in Ukraine, the hope now is that goodwill from the notorious unpredictable White House can last the week.