PRESS: UK government mulls delaying defence spending increase decision

UK Prime Minister Andy Burnham is considering delaying a decision about when the government will increase defence spending until the autumn of next year in the hope that Britain's economy improves, the Times reported on Tuesday.

The government had been expected to hold the spending review, which would set out a timetable for increasing defence spending to 3% of GDP, in the spring. The review will set out plans for all government spending up until 2030.

However, the Times suggested ministers are now considering delaying the review so it can take place alongside the next budget, enabling the government to raise taxes or cut spending to fund the increase. Hitting the Nato defence spending target would cost an extra £10 billion a year.

Citing a Whitehall source, the report said the 'working assumption' was that the spending review would be pushed back until next October, pointing to the decision by Rachel Reeves to hold only one fiscal event a year.

A government source told the Times it would be wrong to characterise it as a delay as ministers had never set a date for the spending review.

Helen Miller, director of the Institute for Fiscal Studies think tank, told the Times that delaying the spending review until next autumn would allow Burnham's government more time to develop its plans. But she warned that "wouldn’t make the exercise any easier".

She said: "Under current plans, growth in overall spending slows over the rest of the parliament and sticking to those plans would almost certainly mean that the spending review entails cuts for some departments.

"If defence spending was increased to 3 per cent of GDP it would take up all of the currently planned increase in spending in coming years."

In London, shares in defence manufacturer BAE Systems PLC and Babcock International Group PLC fell back. BAE traded 2.0% lower at 1,896.00 pence each, making it the worst performing FTSE 100 stock, while Babcock was down 0.8% at 918.40p. On the FTSE 250, defence and security firm QinetiQ Group PLC was down 2.4% at 463.80p.

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