The military faces a cut of more than £2bn in its day-to-day budget in the year to March 2024 despite growing security threats, new calculations by Labour appear to show.
The potential drop in spending in real terms – when inflation is taken into account – was compared with the £33bn allocated to defence running costs – such as salaries, training and fuel – in the 12 months to March 2022, the opposition’s defence team said.
John Healey, the shadow defence secretary, said Rishi Sunak’s government had failed to commit to any new funding for defence in the autumn statement delivered last week.
“That means less money for forces pay, recruitment and training,” he told Sky News.
But a defence source signalled that Chancellor Jeremy Hunt had provided an assurance that the Ministry of Defence (MoD) would receive help to protect its budget from inflation – though the source did not offer a specific figure.
“The chancellor has committed to provide sufficient funding and exceptional budgetary flexibilities to meet defence’s external pressures in 2023-2024 so that core defence spending will be at least flat in real terms,” the defence source said.
“The chancellor and prime minister acknowledge defence spending will then need to rise and we will look at that in the Integrated Review refresh.”
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The comments appear to indicate that the MoD is expecting to draw on reserves held by the Treasury to bolster its budget – otherwise it will shrink in real terms.
Using official figures provided by the House of Commons library, Labour studied a four-year settlement for defence, from 2021, agreed when Boris Johnson was prime minister as part of a sweeping Integrated Review of defence, security and foreign policy.
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The data put the amount of the defence budget spent on resources – known as resource departmental expenditure limit (RDEL) – at £33.3bn in the year to March 2022, based on November inflation forecasts. This was signalled to drop to £32.1bn in the year to March 2023, fall again to £31.2bn in the year to March 2024 and once more to £31bn in the year to March 2025.
Image: Shadow defence secretary John Healey
The Sunak government is reviewing Mr Johnson’s Integrated Review in the wake of Russia’s full-scale invasion of Ukraine.
Ben Wallace, the defence secretary, had said this refresh would be completed by December. But, in his autumn statement, Mr Hunt indicated that it might not be until next year.
“The prime minister and I both recognise the need to increase defence spending. But before we make that commitment it is necessary to revise and update the Integrated Review,” the chancellor told MPs last Thursday.
“I have asked for that vital work to be completed ahead of the next budget and today confirm we will continue to maintain the defence budget at least 2% of GDP to be consistent with our NATO commitment.”
Mr Sunak has declined to offer any new target on defence spending.
By contrast, Liz Truss, his short-lived predecessor, pledged to lift defence spending to 3% of national income by the end of the decade.
Global financial markets gave a clear vote of no-confidence in President Trump’s economic policy.
The damage it will do is obvious: costs for companies will rise, hitting their earnings.
The consequences will ripple throughout the global economy, with economists now raising their expectations for a recession, not only in the US, but across the world.
The court ruled to uphold the impeachment saying the conservative leader “violated his duty as commander-in-chief by mobilising troops” when he declared martial law.
The president was also said to have taken actions “beyond the powers provided in the constitution”.
Image: Demonstrators stayed overnight near the constitutional court. Pic: AP
Supporters and opponents of the president gathered in their thousands in central Seoul as they awaited the ruling.
The 64-year-old shocked MPs, the public and international allies in early December when he declared martial law, meaning all existing laws regarding civilians were suspended in place of military law.
Image: The court was under heavy police security guard ahead of the announcement. Pic: AP
After suddenly declaring martial law, Mr Yoon sent hundreds of soldiers and police officers to the National Assembly.
He has argued that he sought to maintain order, but some senior military and police officers sent there have told hearings and investigators that Mr Yoon ordered them to drag out politicians to prevent an assembly vote on his decree.
His presidential powers were suspended when the opposition-dominated assembly voted to impeach him on 14 December, accusing him of rebellion.
The unanimous verdict to uphold parliament’s impeachment and remove Mr Yoon from office required the support of at least six of the court’s eight justices.
South Korea must hold a national election within two months to find a new leader.
Lee Jae-myung, leader of the main liberal opposition Democratic Party, is the early favourite to become the country’s next president, according to surveys.
While the UK’s FTSE 100 closed down 1.55% and the continent’s STOXX Europe 600 index was down 2.67% as of 5.30pm, it was American traders who were hit the most.
All three of the US’s major markets opened to sharp losses on Thursday morning.
Image: The S&P 500 is set for its worst day of trading since the COVID-19 pandemic. File pic: AP
By 8.30pm UK time (3.30pm EST), The Dow Jones Industrial Average was down 3.7%, the S&P 500 opened with a drop of 4.4%, and the Nasdaq composite was down 5.6%.
Compared to their values when Donald Trump was inaugurated, the three markets were down around 5.6%, 8.7% and 14.4%, respectively, according to LSEG.
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Worst one-day losses since COVID
As Wall Street trading ended at 9pm in the UK, two indexes had suffered their worst one-day losses since the COVID-19 pandemic.
The S&P 500 fell 4.85%, the Nasdaq dropped 6%, and the Dow Jones fell 4%.
It marks Nasdaq’s biggest daily percentage drop since March 2020 at the start of COVID, and the largest drop for the Dow Jones since June 2020.
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5:07
The latest numbers on tariffs
‘Trust in President Trump’
White House press secretary Karoline Leavitt told CNN earlier in the day that Mr Trump was “doubling down on his proven economic formula from his first term”.
“To anyone on Wall Street this morning, I would say trust in President Trump,” she told the broadcaster, adding: “This is indeed a national emergency… and it’s about time we have a president who actually does something about it.”
Later, the US president told reporters as he left the White House that “I think it’s going very well,” adding: “The markets are going to boom, the stock is going to boom, the country is going to boom.”
He later said on Air Force One that the UK is “happy” with its tariff – the lowest possible levy of 10% – and added he would be open to negotiations if other countries “offer something phenomenal”.
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3:27
How is the world reacting to Trump’s tariffs?
Economist warns of ‘spiral of doom’
The turbulence in the markets from Mr Trump’s tariffs “just left everybody in shock”, Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions in Boston, told Reuters.
He added that the economy could go into recession as a result, saying that “a lot of the pain, will probably most acutely be felt in the US and that certainly would weigh on broader global growth as well”.
Meanwhile, chief investment officer at St James’s Place Justin Onuekwusi said that international retaliation is likely, even as “it’s clear countries will think about how to retaliate in a politically astute way”.
He warned: “Significant retaliation could lead to a tariff ‘spiral of doom’ that could be the growth shock that drags us into recession.”
It comes as the UK government published a long list of US products that could be subject to reciprocal tariffs – including golf clubs and golf balls.
Running to more than 400 pages, the list is part of a four-week-long consultation with British businesses and suggests whiskey, jeans, livestock, and chemical components.
Meanwhile, Prime Minister Sir Keir Starmer said on Thursday that the US president had launched a “new era” for global trade and that the UK will respond with “cool and calm heads”.
It also comes as Canadian Prime Minister Mark Carney announced a 25% tariff on all American-imported vehicles that are not compliant with the US-Mexico-Canada trade deal.
He added: “The 80-year period when the United States embraced the mantle of global economic leadership, when it forged alliances rooted in trust and mutual respect and championed the free and open exchange of goods and services, is over. This is a tragedy.”