Chancellor John Healey has confirmed that the UK will begin treaty negotiations on a multilateral defence mechanism, or Bank, with Finland, Poland and the Netherlands to boost defence investment and joint procurement across NATO allies.
In his Budget speech to MPs, Mr Healey said: "I'm now confirming that we will commence treaty negotiations on the multilateral defence mechanism, or Bank, with Finland, Poland and the Netherlands to boost defence investment and joint procurement across NATO allies."
Defence spending target and investment plans
Mr Healey said that he is "getting work under way" to reach spending of 3% of GDP on defence by 2030 and will set out how he will hit that target at next year's Spending Review. However, he did not specify when the Government will spend 3% of GDP on defence, which is the NATO target.
He also announced that the National Wealth Fund will "launch a new focus on defence, dual-use technology and sovereign capability", deploying up to £5bn of investment over four years.
The Defence Investment Plan (DIP) launched earlier this year has a £4.7billion hole in it, which will be filled "including through capital reprioritisation across Whitehall", the Chancellor specified.
NATO commitment and new taskforce
Mr Healey will set out how the UK will meet NATO's commitment to spend 3.5% of GDP on defence by 2035 in next year's spending review. He said: "At the spending review next year, I confirm that I will set out the details of how we will meet our NATO commitment to spend 3.5% of GDP on defence by 2035, with a target date for 3% in 2030."
He also announced a new innovative defence finance taskforce to look into how this will be achieved, and that the Government is increasing private investment into defence, including by public private partnerships.
Ukraine support and opposition response
It was also confirmed that the UK will commit £10billion of additional economic and military support to Ukraine, and half a billion in urgent military funding this winter.
Tory leader Kemi Badenoch criticised Labour over its failure to set out how it will reach 3% defence spending. She said: "Look at them. If war comes, do we want this lot running the country, people so unserious that you can't have social security without national security? Because if you cannot defend your country, there will be nothing left to defend."
Ms Badenoch also blasted the Budget as "not good enough, not strong enough, not bold enough" and warned the UK remains "overspent, overborrowed, overtaxed and drowning in an out-of-control welfare system" under Labour.
Business tax changes
Mr Healey also announced a major change to business taxes in the Budget. The threshold at which small companies start paying rates will rise from £12,000 to £18,000.
The Chancellor also confirmed a temporary rise in the bank surcharge, currently levied at 3% on top of the 25% corporation tax rate, by an extra 3% to help fund energy support.
