Reeves is facing tough choices in spending review, says IFS

THE CHANCELLOR'S upcoming spending review provides a “natural point” to put the UK on the path to further boost defence spending, an economic think-tank has said.

- HELEN CORBETT

Defence and NHS spending will dominate the review, the Institute for Fiscal Studies said in an analysis.

It said Rachel Reeves will face “unavoidably” tough choices on June 11, when she announces the government’s day-to-day departmental budgets for the next three years and investment budgets for the next four.

One of the central trade-offs will be how much funding goes to the NHS, as increasing it at anything like the historical average rate would mean real-terms cuts for other “unprotected” departments, the IFS said.

In the spending review Ms Reeves will confirm the path for defence spending.

“This would be a natural point for the government to put the UK on a path towards spending 3% of GDP on defence, or to speed up the timeline at which the UK will reach 2.5%, if it views this as necessary,” the think-tank said.

The UK Government has previously set out its “ambition” to reach 3% in the next parliament, after meeting its pledge to ratchet up defence spending to 2.5% by April 2027.

Defence Secretary John Healey has said getting to 3% by 2034 is a firm commitment, telling The Times there was “no doubt” Britain would be spending 3% “in the next parliament”.

IFS research economist Bee Boileau said funding elsewhere will likely slow to a “trickle” at the spending review.