IMF urges UK to fund defense expansion through spending cuts
The fund says Britain’s plan to lift military spending would add £11 billion a year, requiring savings rather than permanent borrowing.
Key takeaways
- The IMF says Britain’s defense target would add £11 billion in annual costs by 2030.
- The fund advises using budget savings, not permanent borrowing, to pay for higher military spending.
- Global public debt is projected to reach 100% of GDP by 2030, according to the IMF assessment.
The IMF says Britain’s plan to raise military spending to 3% of GDP by 2030 would add £11 billion a year to the budget. It has urged the government to cover the cost with savings rather than permanent borrowing.
Rodrigo Valdes, director of the IMF’s Fiscal Affairs Department, said borrowing might be used briefly for urgent military needs, but those costs should later be balanced within the budget. The fund also cautioned against tax increases, saying tax burdens are already high across Europe and further rises could affect investment, production and consumption.
The government is expected to set out a detailed funding plan in next year’s public spending review. The choice of where to make cuts would be for the government to decide, while IMF deputy department director Era Dabla-Norris said governments should explain their spending priorities to the public.
The advice presents a political challenge for the Labour government. A planned £5 billion cut to the welfare budget was withdrawn last year after objections from its own lawmakers, according to the report.
The IMF’s warning comes amid wider public debt pressures. It said global public debt is projected to reach 100% of GDP by 2030, a level not seen since the end of World War II.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
