Healey shuffles his defences

By the Editorial Team · Tuesday, October 27, 2026

Chancellor John Healey plans to increase defense spending to meet NATO’s 3.5% GDP target by 2035, using investments through the National Wealth Fund and British Business Bank to bypass current fiscal limits. This funding approach has sparked concerns over transparency and whether it addresses urgent military needs, as the UK faces immediate capability gaps and personnel shortages.

Chancellor John Healey has signaled plans to increase defense spending with the aim of meeting NATO’s target of allocating 3.5% of national output to military expenditure by 2035. However, the approach outlined in the upcoming Budget has prompted debate over the sustainability and immediacy of this funding boost.

Healey’s commitment to raising defense investment comes amid ongoing challenges in balancing budget priorities, following his resignation from the Cabinet during a dispute with former Chancellor Rachel Reeves over military budgets. Since then, Healey’s elevation to the Treasury under Prime Minister Andy Burnham has underscored the government’s intent to strengthen national security, albeit within tight fiscal constraints.

According to reports, the Budget will allocate an additional £15.4 billion to the National Wealth Fund (NWF) and £5 billion to the British Business Bank (BBB). These funds, categorized as investments rather than current spending, are intended to circumvent existing fiscal rules and spending limits. The NWF, originally established to support investments in sectors such as ports, hydrogen energy, and industrial clusters, will now apparently be directed towards defense-related technologies, including drone development. Meanwhile, the BBB, which traditionally backs UK innovation, is also expected to play a role in financing these initiatives.

Critics have expressed concern that repurposing these public financial institutions to fund defense commitments effectively masks borrowing off the government’s balance sheet. This strategy raises questions about transparency and the long-term implications for fiscal responsibility, as it effectively defers the true cost of defense spending without addressing immediate operational needs.

Furthermore, analysts emphasize that while investment in advanced technology is important for future capabilities, it does not resolve current vulnerabilities within Britain’s Armed Forces. The military faces significant personnel shortages, and unlike some allied nations such as the Netherlands, lacks large numbers of trained reservists ready to be deployed rapidly. There are also urgent requirements for anti-ballistic missile systems, satellite defenses, and replenishment of the UK’s air force assets, which are currently stretched thin in overseas deployments including patrols in the Arabian Gulf.

While Healey’s strategy may appear to align with NATO’s long-term defense spending goals, questions remain about whether it adequately addresses the immediate challenges facing the UK’s national security apparatus. Observers caution that relying on creative funding mechanisms could perpetuate a pattern of underinvestment and delay critical modernization efforts necessary to respond to emerging threats.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.