Increased defence spending will boost UK economic growth, Streeting says

Defence secretary says he will give arms industry ‘clarity and confidence’ in contrast to row preceding Starmer’s exit

Wes Streeting has said increased defence spending would make “an enormous contribution” to economic growth as he emphasised that the military will be a spending priority for Andy Burnham’s government over other departments.

The new defence secretary, in a speech at the Farnborough airshow, did not make any extra financial commitments but promised he would give the arms industry “clarity and confidence” in contrast to the row that contributed to the fall of Keir Starmer.

Spending more on defence would come at “an opportunity cost across government”, Streeting said in a subsequent briefing, meaning the Ministry of Defence had to show “we are spending existing resources wisely”.

He also criticised Israel for having “fallen short” in its conduct during the war in Gaza and in its operations in the West Bank. Streeting said defence was the portfolio he wanted on his return to government after he resigned as health secretary in May.

Burnham recommitted the UK to lifting defence spending from 2.6% of gross domestic product to the Nato target of 3.5% by 2035 in his first speech as prime minister on Monday, implying a real-terms increase of more than £25bn in less than a decade.

In a video address played before Streeting’s speech, Burnham said military spending would help reindustrialise the UK. “We are going to honour our commitments on defence and use that investment to transform people’s lives,” he added.

UK defence spending was last at 3.5% of GDP in the early 1990s, in the immediate aftermath of the cold war. A combination of renewed Russian aggression, concern about China and pressure from the US on European Nato countries has led to a rethink.

Expectations that the UK would meet spending obligations originally demanded from all Nato allies by Donald Trump have been increased further by Burnham’s appointment of the former defence secretary John Healey as chancellor .

The appointment suggests No 10 and the Treasury are strongly aligned with the MoD in wanting to rebalance the UK economy towards defence, a notable shift from traditional Labour priorities of favouring spending on health and education.

Healey quit Starmer’s government last month after a protracted row over defence spending, complaining that the then prime minister would not agree to a credible trajectory towards the 3.5% target by the end of the decade.

In his resignation letter, Healey said the UK must set “a headmark date for 3% of GDP on defence in 2030”. Starmer, he complained, had only been willing to offer 2.7% that year, despite saying publicly that defence spending was a priority.

Healey’s surprise appointment to the Treasury has raised the question of whether Labour would be willing to reopen spending reviews agreed under Starmer and commit to what would amount to £9bn a year more on by the end of the decade.

Streeting dodged questions on whether Labour’s new leadership team wanted to hit 3% by 2030. “It’s not for me to write the chancellor’s budget or the next spending review, but he’s very clear about where he stands on defence investment, as am I,” the defence secretary said in his briefing.

No 10 and Healey have been similarly careful this week. On Tuesday, the prime minister’s official spokesperson would only repeat that the UK would honour its commitments while promising more on defence in due course.

None of the typical caution about future spending has dampened the sense that defence is a top priority. “What an opportunity we have under this prime minister and this chancellor,” Streeting told a packed auditorium.

The two men understood, Streeting said, “the enormous contribution that defence can make to the prime minister’s vision for this country, in terms of jobs, growth in every postcode and reindustrialisation”.

At Farnborough, he unveiled the first British prototype “loyal wingman” drone, designed and assembled by BAE Systems in Warton, Lancashire. A mini jet costing about £15m, the drone is intended to fly as part of a group around a controlling Typhoon fighter, increasing reconnaissance and military capability.

Critics say military spending is an inefficient way to create jobs relative to other forms of state spending. Infrastructure spending cuts to pay for last month’s defence investment plan could cost the UK 10,000 jobs , according to one thinktank. Another study concluded investing in health created more jobs and growth per pound spent than investing in defence.

Streeting was also asked whether he stood by comments he had made in a July 2025 WhatsApp exchange with Peter Mandelson that Israel was “committing war crimes before our eyes” . The new defence secretary said he did and that while he “very strongly” believed in Israel’s right to self-defence, it had gone too far in Gaza and the West Bank.

“I also hold Israel, as a friend and ally, to the same standard that we hold ourselves to. That is the standard that should be applied to Israel. That is the standard that I think I feel they’ve fallen short of,” he said.

Streeting said although the defence portfolio was the one he wanted, his “anxiety increased” every time another Labour MP was summoned to No 10 to see Burnham on Monday. Streeting was eventually appointed shortly before 11pm, replacing Dan Jarvis who had lasted less than six weeks, after what the Ilford North MP described as “an agonising wait”.