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The UK is boosting defence spending to strengthen European security and play its part in working with the US in negotiating a new trade deal between the two long-standing allies.
British Prime Minister Rachel Reeves told Fox Business that the UK government’s plan to increase defence spending will come as part of efforts to boost the remaining country’s economy and industrialize the country’s region.
“Strong defense and a strong economy are closely linked. I believe it very much. That’s the industrial policy we are pursuing as a government,” Reeves said. “The UK has now had the biggest increase in defence spending since the end of the Cold War.”
The UK government’s plan will spend £2.2 billion on defense between 2025 and 2026, with the GDP ratio increasing to 2.5% by 2025. According to the government’s plan, that figure will increase by 3% in the next assembly. In 2024, the UK spent an estimated 2.33% of its GDP on defense, according to NATO data.
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British Prime Minister Rachel Reeves told FOX Business, which is seeing opportunities for trade contracts between the UK and the US (Shannon Finney/Getty Images by Semafor/Getty Images)
To gain more value on UK defence spending, Reeves added, the government will “invest in new, innovative, particularly technology-based solutions to improve military equipment using a portion of our defence budget.” She added that the UK is encouraging other European countries to follow suits by strengthening their own defence spending.
“It is absolutely essential for European countries to do more to increase their defense spending and keep the continent safe in the face of increased aggression from Russia, and that’s what many countries in Europe do now,” Reeves said. “The UK is facing this challenge. We are not passive in the face of the changes we are facing. We step up, spend more on defense, use that money to activate and deny a part of the UK that has been left behind for a long time.”
Last year, NATO data showed that 23 of the 32 member states, including Finland and Sweden, the two most recent members of the alliance, met their 2% defence spending commitments. This is the maximum number of NATO members since its inception in 2014 that have met or exceeded that threshold. NATO will release new data on the subject ahead of the annual summit scheduled for late June.
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British aircraft carrier HMS Queen Elizabeth arrives in New York City for a 2018 port visit. (Christopher Farlong / Getty Images / Getty Images)
Reeves will meet with various Trump administration officials this week, including Treasury Secretary Scott Bescent, to negotiate a new trade deal between the two countries following the imposition of tariffs on President Donald Trump’s trading partners, including the UK.
The United States and the UK began debate over trade agreements in May 2020, months after Britain left the European Union during Trump’s first term, but the deal did not come true either during the then or former President Joe Biden administration.
“Trade contracts have been delayed for a long time,” Reeves said. “While there is no closer partnership between the UK and the US, we absolutely recognize and understand concerns about countries operating a sustainable, large trade surplus with the US. The UK is not one of these countries.”
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She said a considerable number of Americans and British citizens work for businesses headquartered in opposition countries, leading to tough economic ties that the prime minister believes will help promote trade transactions.
“With a million British people working in American companies, we are very proud to do so, and with a million Americans working in British companies, our economy is very closely intertwined. So we believe there are contracts that we should make to reduce trade barriers in a way that is suitable for our countries, in a way that is good for our industry and ultimately, in a way that is good for our consumers,” Reevese said.
“We continue to advance in that area. We are not in a hurry to deal. Of course, as a UK government, we only sign contracts if they are in the interests of our country,” she said. “But I think a transaction should be made.”
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The Prime Minister added that, aside from dealing with tariffs and other trade barriers, she is seeing opportunities for closer technical partnerships between the two countries.
“There’s already a very close defense and security partnership between the UK and the US, so let’s take that to the next stage,” Reeves said. “Scientific companies in both countries are absolutely immeasurable, so let’s see how technology partnerships can be created on the same basis as they have security and defense partnerships.”
