Feb 2, 2023
UK’s Wallace Seeks Greater Military Spending to Counter Inflation
(Bloomberg) -- Defence Secretary Ben Wallace said he’s pushing the Treasury for more military spending at the UK budget in March to offset the country’s double-digit inflation.
Wallace said he met earlier this week with Chancellor of the Exchequer Jeremy Hunt to discuss the Ministry of Defence’s budgetary requests. At a news conference in Portsmouth, southern England, he acknowledged defence had been awarded a “significant settlement” in 2020 that runs until the 2024-25 financial year.
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“I look in the short-term for funding to mitigate the impact of things like inflation,” he said, when asked about his demands. “I have a very big capital budget, and that will form part of the negotiations with the Treasury.”
Wallace’s comments illustrate the competing pressures Hunt is under, coming at a time when hundreds of thousands of public sector workers are striking to demand their pay keeps pace with inflation, while backbench members of his own Conservative Party agitate for tax cuts.
Those demands run up against Hunt and Prime Minister Rishi Sunak’s stated economic priorities of halving inflation this year and getting the national debt falling by the end of the current Parliament. So far, the two men have held firm in telling striking nurses, teachers and civil servants that there is no extra money to fund pay rises and that any such payment would drive inflation even higher.
The UK currently spends about 2.1% of its gross domestic product on defense, according to North Atlantic Treaty Organization statistics. That makes it one of the few countries to meet NATO’s 2% target. Nevertheless, Wallace said he’d like to see the British proportion rising.
Wallace said it’s important that a new overall settlement for defense spending to replace the current multi-year package will need to be based on “a recognition that as the world gets more dangerous and unstable defense should continue to get a growing portion of spend.”
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