Middle East: Economic Update

Lord Tyrie Excerpts

Thursday 26th March 2026 Lords Chamber

[Lord Livermore (Lab)]

As I think I have said clearly, the Chancellor has approved access for the Ministry of Defence to use the special reserve to deploy additional capabilities in the Middle East, meaning that the net additional costs of these operations will be funded by the Treasury.

[Lord Tyrie (Non-Afl)]

My Lords, as I understand it, the Government’s commitment on defence spending is to increase it from the 2.3% of GDP that it inherited to 2.6% of GDP, which the Minister has reiterated now. In the 1930s, in the five-year period after 1933, defence spending in this country increased from about 2.3% to 6.8%, which is a trebling. Do the Minister and the Government appreciate that, to deal with the scale of the threats with which we are now faced, we need to take dramatic action on defence—to increase it at considerable pace, far faster than the 0.3% to which the Government are committed at present?

[Lord Livermore (Lab)]

I think I have set out very clearly the pace at which we are increasing and will increase defence spending. From 2027, we will increase defence spending to 2.6% of GDP, and we are increasing spending on defence by £5 billion in this year alone. Our ambition is to reach 3% in the next Parliament, when fiscal and economic conditions allow.