The United Kingdom is boosting its defense spending to do its part to bolster European security and working with the U.S. on negotiating a new trade deal between the two longtime allies.
U.K. Chancellor of the Exchequer Rachel Reeves told FOX Business that the British government’s plan to increase defense spending comes as part of an effort to boost the economy and reindustrialize areas of the country that have been left behind.
“Strong defense and a strong economy go hand-in-hand, I very much believe that, and that is the industrial policy that we are pursuing as a government,” Reeves said. “In the U.K. we’re putting the biggest sustained increase in defense spending since the end of the Cold War through at the moment.”
The U.K. government’s plan will see an extra 2.2 billion pounds spent on defense in 2025-2026, with defense spending as a percentage of gross domestic product (GDP) rising to 2.5% by 2025. That figure would rise to 3% in the next Parliament, according to the government’s plan. In 2024, the U.K. was spending an estimated 2.33% of GDP on defense, according to NATO data.
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Reeves added that in an effort to get more value for the U.K.’s defense spending, the government is “using a proportion of our defense budget to invest in new, innovative, particularly technological-based solutions to better equip our armed forces.” She added that the U.K. is encouraging other European countries to follow suit by stepping up their own defense spending.
“It is absolutely essential that countries across Europe increase their defense spending and do more to keep the continent of Europe safe in the face of increasing aggression from Russia, and that is what many countries across Europe are doing right now,” Reeves said. “Britain is stepping up to this challenge, we’re not passive in the face of the change that we face. We’re stepping up, spending more on defense and using that money to revitalize, reindustrialize parts of Britain that have been left behind for too long.”
Last year, NATO data showed that 23 of the 32 member countries, including the alliance’s two newest members, Finland and Sweden, met the 2% defense spending commitment. That’s the largest number of NATO members meeting or exceeding that threshold since its inception in 2014. NATO will release new data on the subject in advance of the annual summit, which is scheduled for late June.
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Reeves is meeting with various Trump administration officials over the course of this week, including Treasury Secretary Scott Bessent, in an effort to negotiate a new trade agreement between the two countries following President Donald Trump’s imposition of tariffs on trading partners, including the U.K.
The U.S. and U.K. began discussions over a trade agreement in May 2020 – months after Britain left the European Union – during Trump’s first term, though a deal didn’t materialize then or during former President Joe Biden’s administration.
“A trade deal is long overdue,” Reeves said. “There’s no closer partnership than that between the U.K. and the U.S., but we absolutely recognize and understand the concerns that the U.S. has with countries that run persistent, large trade surpluses with the U.S. The U.K. is not one of those countries.”
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She noted that a significant number of American and British citizens work for companies headquartered in the opposite country, leading to tight economic ties that the chancellor believes will help foster a trade deal.
“A million Brits work for American firms and are very proud to do so, and a million Americans work for British firms, so our economies are very closely intertwined, which is why I believe that there is a deal to be done to reduce trade barriers both ways between our countries in a way that is good for jobs, good for industry, and ultimately good for consumers as well,” Reeves said.
“We continue to make progress in that area. We’re not going to rush into a deal. Of course, as a U.K. government, we will only sign a deal if it’s in our country’s national interest to do so,” she said. “But I do think that a deal is there to be done.”
The chancellor added that aside from addressing tariffs and other trade barriers, she sees an opportunity for a closer technological partnership between the two countries.
“There’s already a very close defense and security partnership between the U.K. and U.S. – let’s take that to the next stage,” Reeves said. “The scientific enterprise in both of our countries is absolutely immense, and so let’s look at how we can create a technological partnership on the same basis that we have a security and defense partnership.”
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