Starmer Expected to Approve £18bn Defence Boost Next Week
The Prime Minister is expected to approve an £18 billion increase in defence spending as early as next week, according to The Times reporting cited by The Guardian. The move is described as part of Sir Keir Starmer’s political-survival strategy as Andy Burnham’s pathway to a leadership challenge crystallises. Burnham has previously argued that defence spending should be excluded from the fiscal rules — a position that bond markets have read as adding to fiscal-loosening risk.
The defence announcement, if confirmed next week, would be the largest single fiscal-policy signal from Number 10 since the local-election defeat triggered the leadership crisis. Markets are already pricing in a Burnham succession premium — gilts at 5.85% at the long end — and an £18 billion increase outside the fiscal rules would compound the issuance concern. Whether the measure is funded through reallocation or new borrowing is the diagnostic detail. The Times also reported earlier in the week that the autumn Budget on 26 November is the binding moment for Chancellor Rachel Reeves’s ability to keep the Government’s fiscal stance credible.