Labour’s promise to turbocharge economic growth has already hit trouble
The prime minister and chancellor were in lockstep as they reacted to Friday morning’s GDP figures.
“Disappointing”, the PM’s spokesperson said, echoing Rachel Reeves’s words two hours earlier.
The UK economy shrunk for a second month, contracting 0.1% in October.
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‘Small businesses need the support now’
The government’s message: bear with us, it will take more than a few months to make up for years of economic stagnation; theirs is a long-term, sustainable plan rather than a short-term sugar rush.
They will need public patience to hold.
Labour’s promise to turbocharge economic growth has already hit trouble.
We don’t know how higher National Insurance contributions will weigh on business and economic activity, or whether ambitious plans to build houses will quantifiably impact growth by the next general election.
There is also the question of what the second Trump presidency, and his talk of tariffs, will mean for the UK economy.
The fastest growth in the G7 is still the official target, but it looks increasingly difficult to achieve.
What’s interesting is that Number 10 appears to be talking a little less about growth and the overall economic outlook, and more about personal finances.
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Last week, Sir Keir Starmer announced the new target of delivering higher living standards across every region of the UK.
His spokesperson said on Friday the government’s plan for change is about “the type of growth people feel in everyday lives”.
It is a subtle but important shift in language.
Whatever the wording, the government will likely be judged on whether people feel materially better off by the time of the next election. Whether negative or positive headlines about GDP figures cut through.
Six months since the election, the economy is smaller than when they came into office.
The PM and chancellor may need public patience to hold for a while yet.
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There is “no doubt” the UK “will spend 3% of our GDP on defence” in the next parliament, the defence secretary has said.
John Healey’s comments come ahead of the publication of the government’s Strategic Defence Review (SDR) on Monday.
This is an assessment of the state of the armed forces, the threats facing the UK, and the military transformation required to meet them.
Prime Minister Sir Keir Starmer has previously set out a “clear ambition” to raise defence spending to 3% in the next parliament “subject to economic and fiscal conditions”.
Mr Healey has now told The Times newspaper there is a “certain decade of rising defence spending” to come, adding that this commitment “allows us to plan for the long term. It allows us to deal with the pressures.”
A government source insisted the defence secretary was “expressing an opinion, which is that he has full confidence that the government will be able to deliver on its ambition”, rather than making a new commitment.
The UK currently spends 2.3% of GDP on defence, with Sir Keir announcing plans to increase that to 2.5% by 2027 in February.
This followed mounting pressure from the White House for European nations to do more to take on responsibility for their own security and the defence of Ukraine.
The 2.3% to 2.5% increase is being paid for by controversial cuts to the international aid budget, but there are big questions over where the funding for a 3% rise would be found, given the tight state of government finances.
While a commitment will help underpin the planning assumptions made in the SDR, there is of course no guarantee a Labour government would still be in power during the next parliament to have to fulfil that pledge.
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From March: How will the UK scale up defence?
A statement from the Ministry of Defence makes it clear that the official government position has not changed in line with the defence secretary’s comments.
The statement reads: “This government has announced the largest sustained increase to defence spending since the end of the Cold War – 2.5% by 2027 and 3% in the next parliament when fiscal and economic conditions allow, including an extra £5bn this financial year.
“The SDR will rightly set the vision for how that uplift will be spent, including new capabilities to put us at the leading edge of innovation in NATO, investment in our people and making defence an engine for growth across the UK – making Britain more secure at home and strong abroad.”
Sir Keir commissioned the review shortly after taking office in July 2024. It is being led by Lord Robertson, a former Labour defence secretary and NATO secretary general.
The Ministry of Defence has already trailed a number of announcements as part of the review, including plans for a new Cyber and Electromagnetic Command and a £1bn battlefield system known as the Digital Targeting Web, which we’re told will “better connect armed forces weapons systems and allow battlefield decisions for targeting enemy threats to be made and executed faster”.
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PM Sir Keir Starmer and Defence Secretary John Healey on a nuclear submarine earlier this year. Pic: Crown Copyright 2025
On Saturday, the defence secretary announced a £1.5bn investment to tackle damp, mould and make other improvements to poor quality military housing in a bid to improve recruitment and retention.
Mr Healey pledged to “turn round what has been a national scandal for decades”, with 8,000 military family homes currently unfit for habitation.
He said: “The Strategic Defence Review, in the broad, will recognise that the fact that the world is changing, threats are increasing.
“In this new era of threat, we need a new era for defence and so the Strategic Defence Review will be the vision and direction for the way that we’ve got to strengthen our armed forces to make us more secure at home, stronger abroad, but also learn the lessons from Ukraine as well.
“So an armed forces that can be more capable of innovation more quickly, stronger to deter the threats that we face and always with people at the heart of our forces… which is why the housing commitments that we make through this strategic defence review are so important for the future.”
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