Rachel Reeves will promise the multibillion pound boost (Image: Getty)
Panicking Rachel Reeves will promise a ￡2.2 billion boost to Britain’s defence budget in a desperate attempt to kickstart economic growth. The announcement comes as the Chancellor delivers her highly anticipated spring statement in which she warns that the UK has to “move quickly in a changing world”.
The funding will be invested in advanced technologies including fitting Royal Navy ships with state-of the art Directed Energy Weapons. Ms Reeves is under intense pressure to get the economy growing amid a bleak backdrop of gloomy forecasts, including from the Bank of England. The Treasury's OBR watchdog is expected to follow the Bank’s example by halving economic forecasts for this year.
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Despite the defence announcement, the Chancellor is bracing to wield the axe on spending at the fiscal event - with ￡15 billion of cuts expected as she desperately tries to balance the books.
The government unveiled ￡2 billion in grant funding on Tuesday to deliver up to 18,000 new homes in England to cool Labour anger at “austerity” moves to slash benefits.
Stalling growth and rising debt interest costs - plus looming fears of a Donald Trump trade war - have wreaked havoc with Ms Reeves' plans from her nightmare Budget in the Autumn.
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She must fill a massive hole in the public finances that could be as much as ￡15 billion, even after proposals were unveiled to cut ￡5 billion off welfare.
That will have to come from lower spending as Ms Reeves has ruled out tax rises at this stage.
Although overall budgets are still expected to rise in real terms overall in the coming years, unprotected departments will be exposed to cuts.
The Chancellor will use her statement in the House of Commons to insist she will restore “stability to our public finances”.
“Now our task is to secure Britain’s future in a world that is changing before our eyes,” se will add.
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“The job of a responsible government is not simply to watch this change.
“This moment demands an active government stepping up to secure Britain’s future. A government on the side of working people.
“To grasp the opportunities that we now have and help Britain reach its full potential, we need to go further and faster to kickstart growth, protect national security and make people better off through our Plan for Change.”
Sir Keir Starmer has already promised the government will increase spending on defence to 2.5% of GDP from April 2027 after slashing the overseas aid budget to pay for it.
Ms Reeves will announce that an extra ￡2.2 billion will be made available for next year.
“We have to move quickly in a changing word,” she will say.
“And that starts with investment. So I can today confirm that I will provide an additional ￡2.2bn for the Ministry of Defence next year - a further downpayment on our plans to deliver 2.5% of GDP.
“This increase in investment is not just about increasing our national security but increasing our economic security, too.
“As defence spending rises, I want the whole country to feel the benefits.”
Ministers hope the plan will boost manufacturing and technology sectors and create jobs across the country.
Defence Secretary John Healey said: “This investment will make Britain stronger and safer in a more insecure world. And it will ensure defence is an engine for growth, creating good jobs across the nation.”
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Mel Stride, Shadow Chancellor, said: “Our national security demands a strong economy. Yet since Rachel Reeves’ first Budget, growth is down, borrowing is up and business confidence has been destroyed.
“Labour broke their promises to pensioners on winter fuel payments, and to farmers and businesses with crippling tax rises that have pushed up inflation and interest rates.
“The Chancellor should use the emergency budget later today to fix her own mistakes and end Labour’s war on enterprise.”