Rachel Reeves has been accused of presiding over an 'eye-watering' rise in debt interest, with the Conservatives claiming the increase is nearly sufficient to boost defence spending to 3.5% of GDP. Shadow Chancellor Sir Mel Stride said the Chancellor's legacy would be one of 'unforgivable profligacy'.
Debt Interest Soars Under Labour
The Conservatives argue that borrowing across this parliament is forecast to be 'over a quarter of a trillion pounds higher than the plans Labour inherited'. They expect debt interest spending in 2029-30 to be £23.9 billion higher under Labour than previously forecast—a figure close to the £25 billion increase they say is needed to raise defence investment to 3.5% of GDP.
UK defence spending is projected to reach 2.7% of GDP by 2027-28, but the country has committed to NATO to spend 3.5% by 2035. Former Defence Secretary John Healey resigned last month, claiming the 'Treasury has been unwilling' to 'commit the resources that the nation needs to defend the country at this time of rising threats'.
Tories Call for 3% Defence Spending Target
The Conservatives want defence spending to hit 3% of GDP by the end of this parliament, with Kemi Badenoch setting out plans including restoring the two-child benefit cap. Sir Mel Stride has pledged that 'at least half of all savings the party finds from public spending will be used to reduce government borrowing'.
Sir Mel said: 'The legacy of Rachel Reeves as Chancellor is one of unforgivable profligacy. Debt interest is continuing to soar on her watch, thanks to reckless borrowing and high inflation. Every pound wasted on debt interest is money which could have gone to other priorities, such as the urgent need to boost defence spending where Labour have utterly failed to meet their commitments. The Chancellor's repeated claims to have brought stability and discipline to the public finances are laughable. The bond markets charge us more to borrow than any other G7 country—in fact, more than countries like Greece and Morocco.'
Treasury Defends Record
A Treasury spokesperson responded: 'We have the right economic plan: because of the choices we have made, for the first time since 2004 we are forecast to be borrowing less than the rest of the G7 on average, and borrowing fell to its lowest level for six years. We have boosted defence spending to the highest level since the Cold War, and the Defence Investment Plan goes further still, committing almost £300 billion over this Parliament to transform our armed forces.'
