UK Defence Spending to Reach 3% of GDP by 2030 as Healey Sets Out NATO Funding Path

The UK will aim to spend 3% of GDP on defence by 2030, Chancellor John Healey confirmed in his first Budget on Wednesday 28 October 2026, setting a target date for a pledge that had previously been promised without a firm timetable. The announcement, made in the House of Commons, also restated Britain’s NATO commitment to spend 3.5% of GDP on core defence by 2035, with the detailed route to that higher figure due at next year’s spending review.

Healey told MPs that work was already under way to reach the 2030 target in a fiscally sustainable way. He said the government would look hard at public spending elsewhere and use more innovative financing alongside the private sector and international allies. That combination — cuts elsewhere plus private and allied finance — is now the central question in the defence debate, because the target itself is set while the funding route is not yet fully spelled out.

The Chancellor’s own history gives the announcement added weight. Healey resigned as defence secretary in June 2026 over what he saw as inadequate defence funding, after arguing that the 3% by 2030 threshold would be missed under the previous premiership. His return as Chancellor, and his decision to put the target date in his first Budget, turns a resignation issue into a governing commitment — one his critics will now measure him against.

UK Defence Spending to Reach 3% of GDP by 2030 — Quick Reference Summary

Why the 2030 date matters after months of argument

Until Wednesday, the 3% figure existed as an ambition without an agreed date. Military figures, opposition politicians and some allies had pressed the government to set out a credible path, arguing that a pledge without a timetable could not be planned against. Healey’s statement answers the timing question directly, even though it defers the detailed funding plan to the spending review.

The context is a NATO agreement reached at the 2025 leaders’ summit to raise alliance defence spending to 5% of GDP by 2035, made up of 3.5% on core defence and 1.5% on defence- and security-related spending. Britain’s 3% by 2030 target sits inside that framework as an interim step. It also sits alongside the Budget’s separate £10 billion package of additional economic and military support for Ukraine, which Healey announced in the same speech.

Reaction was swift and split along familiar lines. NATO Secretary General Mark Rutte welcomed the announcement, saying it would put Britain on a credible path towards its commitments. Defence Secretary Wes Streeting said the Chancellor had restated both the 2030 and 2035 commitments. Conservative leader Kemi Badenoch criticised the announcement as a plan to have a plan, arguing that a target date without a funding plan does not yet count as a credible route.

How the Defence Investment Plan is being paid for — for now

Healey said the Budget fully funds the Defence Investment Plan, including through capital reprioritisation across Whitehall. In practice, that means money has been moved within capital budgets rather than raised through a single new tax for defence. Reuters reported that reprioritisation in other departments would fill a £4.7 billion gap in the plan, a figure that had drawn scrutiny before the Budget.

The plan is intended to take spending to 2.7% of GDP in 2027-28, then 3% by 2030 and 3.5% in 2035, according to Budget reporting. That stepped path matters because it shows the increase is backloaded: the heaviest lifting comes in the final years of the decade. Critics argue that backloading makes the pledge vulnerable to later fiscal pressure, while supporters say it matches the time needed to build industrial capacity and recruit personnel.

Alongside the headline target, the Budget created an Innovative Defence Finance Taskforce to maximise the contribution of private and international finance to UK defence. It also set out up to £5 billion over the next four years from the National Wealth Fund and the British Business Bank for defence, dual-use and other sectors supporting national security. Treaty negotiations with Finland, Poland and the Netherlands are to explore pooled funding and joint procurement across NATO allies.

What the spending review must now decide

The spending review next year is where the target meets the trade-offs. Healey has already signalled that reaching the commitment could come at the cost of spending elsewhere, telling MPs he would look hard at public spending as he did to fund the Defence Investment Plan. The Office for Budget Responsibility has warned that after accounting for commitments in areas including the NHS, defence and schools, the government’s spending assumptions imply unprotected areas of day-to-day spending could face a 2.6% a year real-terms reduction in the final three years of the forecast.

That warning connects defence directly to the wider Budget story. The same Budget that set the defence target also delivered a £100 household energy payment for about 20 million households, funded in part by raising the bank surcharge from 3% to 6% for 15 months. Readers weighing the defence commitment against household support can see the same fiscal tension from both sides: money found for one priority must come from somewhere else.

The opposition’s challenge is also clear. The Conservatives have demanded Healey’s resignation if he failed to set out a credible plan at the Budget, and Badenoch’s plan to have a plan line suggests they will treat the spending review, not the Budget, as the real test. Whether the review produces a year-by-year funding path, rather than another target date, is not publicly verified yet — and it is the outcome defence watchers will be looking for.

Has the UK already reached 3% of GDP on defence?

No. The 3% figure is a target date for 2030, set in the Budget on 28 October 2026. The Defence Investment Plan is intended to take spending to 2.7% of GDP in 2027-28 first.

What is the NATO 3.5% commitment?

Britain has committed to spend 3.5% of GDP on core defence by 2035, as part of a wider NATO agreement to reach 5% of GDP on defence and related security spending by 2035. The detailed UK plan for 3.5% is due at next year’s spending review.

How much extra will 3% cost?

The Office for Budget Responsibility estimates that reaching 3% would cost an extra £17.3 billion in 2029-30.

How is the Defence Investment Plan funded in this Budget?

Healey said it is fully funded, including through capital reprioritisation across Whitehall — moving money within capital budgets — plus new private and international financing routes, including up to £5 billion over four years from the National Wealth Fund and the British Business Bank.

Will defence spending mean cuts elsewhere?

Healey has said reaching the target could involve looking hard at public spending elsewhere, and the OBR has warned that unprotected day-to-day spending could face real-terms reductions in the final three years of the forecast. The exact balance will be set out at the spending review, so it is not publicly verified in detail yet.