UK Budget 2026: Government confirms full funding for Defence Investment Plan and sets 2030 target for 3% defence spending

The Government has confirmed full funding for its Defence Investment Plan and set a target date of 2030 for defence spending to reach 3% of GDP.

The announcements, made in the Autumn Budget, came alongside new measures designed to unlock up to £5 billion of investment for UK defence businesses.

Chancellor John Healey unveiled the commitments in his Autumn Budget on 28 October – presenting defence as both a national security priority and a driver of industrial growth.

He told MPs: “In today’s budget, I ​am ‌fully funding the Defence Investment Plan, including through capital reprioritisation across Whitehall.”

The plan includes £15 billion of additional investment above previously agreed spending commitments, with £10.3 billion already identified through reallocations across government.

However, industry leaders said the Budget does not yet provide the long-term certainty needed to unlock investment.

ADS – the trade association for the UK’s aerospace, defence, security and space sectors -welcomed confirmation of funding for the Defence Investment Plan, continued support for Ukraine and the commitment to increase defence spending, but warned that businesses are still awaiting the detailed plans needed to invest with confidence.

Defence spending to reach 3% of GDP by 2030

A central announcement was the Government’s target to reach 3% of GDP on defence by 2030, with further details on the pathway to NATO’s 3.5% target due to be published at next year’s Spending Review.

Healey also linked the spending plans to the conflict in Ukraine and announced a further £10 billion package of economic and military support.

He told MPs that he and Prime Minister Andy Burnham had spoken to Ukrainian President Volodymyr Zelensky ahead of the Budget.

£5bn investment boost for defence industry

Alongside the spending commitments, the Chancellor announced a package of measures intended to strengthen the UK’s defence industrial base and attract additional private capital into the sector.

A new defence finance task force will begin work ahead of next year’s Spending Review, while the UK will enter treaty negotiations with Finland, Poland and the Netherlands on a new multilateral defence financing mechanism aimed at supporting defence investment and joint procurement.

The Government also plans to increase private sector participation in defence projects through new financing approaches and public-private partnerships.

For defence manufacturers, technology firms and SMEs, one of the most significant announcements was the decision to give the National Wealth Fund and British Business Bank a stronger focus on defence, dual-use technologies and sovereign capability.

Together, the two institutions will deploy up to £5 billion of investment and lending over the next four years.

“The stakes could not be higher”

Responding to the budget, Kevin Craven, CEO of ADS said:

“The Budget offers some help for businesses, but it does not go far enough in addressing the fundamental challenges facing our sectors. Short-term relief is no substitute for the action needed to bring down the cost of doing business and unlock long-term investment and growth.

“Measures to boost the National Wealth Fund and the British Business Bank’s offer to defence and dual use firms will help in the short term, as will extra support for scale-ups and new businesses. The additional funding towards the next generation of gas turbines is also a noteworthy commitment.

“Confirmation of funding for the Defence Investment Plan and continued support for Ukraine are welcome. We also note the commitment to spend 3% of GDP on defence by 2030 on the way to meeting the UK’s NATO obligations. However, it is disappointing that industry is still waiting for the full and detailed plan it needs to invest with confidence.

“The stakes could not be higher for our economy, our industries and our national security. We cannot afford to miss this moment, and delaying action comes at a cost. The Government needs to make the bigger decisions at next year’s Spending Review that will give industry the confidence to invest, grow and deliver.”