Sir Keir Starmer ‘must quickly’ raise defence spending or face ‘swingeing’ military cuts this year

Published

2 months ago

February 17, 2025

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Sir Keir Starmer is under pressure to quickly lift defence spending to 2.5% of GDP or face new military cuts this year – even as he considers deploying troops to Ukraine, Sky News understands.

Defence sources said such an increase – which would amount to about an extra £5bn annually – is still far short of what is required to rebuild and transform the armed forces, stressing that an ultimate hike to at least 3% of national income would be necessary.

But the sources said a rapid rise in investment to the government’s promised target of 2.5% of GDP, from 2.3% at present, should prevent new swingeing reductions in capabilities – just as Donald Trump orders European militaries to be stronger.

“The truth is there needs to be more money now or else prepare for further cuts,” said one military insider, who spoke on condition of anonymity.

A second defence source said: “We know the government is in a difficult financial position. But getting to 2.5% sooner rather than later would be enormously beneficial for their relationship with the new US administration, and the UK’s leadership role within NATO.”

The prime minister has pledged to set a path to investing 2.5% of GDP on defence but he has yet to say when this commitment will be announced, let alone by what date the target will be met.

Defence sources said they believe the Treasury wants to push the timeline out to the very end of this parliament – a delay that would leave the armed forces to “wither on the vine”.

“It is just not serious,” said a third defence source, sounding exasperated.

The UK position on defence spending came into sharp focus last week as European allies reeled from a barrage of criticism by the new Trump administration for their over-reliance on the US to defend Europe and support Ukraine.

Britain – a nuclear power – presents itself as the strongest European military within the NATO alliance and boasts of a special relationship with the US.

Yet, Sir Keir has stuck with his 2.5% target even as Mr Trump calls on allies to boost defence expenditure to 5% and take on a much greater responsibility for security in Europe.

Mark Rutte, the secretary general of NATO, says the goal for all 32 allies should be “north of 3%”.

The reality of Europe’s weakness on defence has been brutally exposed by Mr Trump’s approach to ending Russia’s war in Ukraine, with the president sidelining the UK, the Europeans and Kyiv.

US envoys are due to meet Russian officials in Saudi Arabia on Monday as France’s president hastily convenes a meeting of European leaders, including Sir Keir, in Paris.

But, given the hollowed-out state of the UK armed forces, an announcement by the prime minister that he was considering sending British soldiers to Ukraine to help secure the peace as part of any ceasefire deal raised eyebrows within defence circles.

One insider questioned how Mr Starmer could propose such a challenging deployment without explaining how he was going to fill the army’s gaping gaps in weapons and manpower.

Ukrainian President Volodymyr Zelenskyy has said any international security force of British and other foreign troops would need to be about 110,000-strong.

The UK would struggle to sustain a deployment of several thousand soldiers for any enduring length of time and would have to give up other commitments, such as a battlegroup of around 900 military personnel based in Estonia on a NATO mission to deter Russian aggression.

With defence matters in focus, Admiral Sir Tony Radakin, the head of the armed forces, and his fellow chiefs met with Sir Keir on Friday to talk to him about military capabilities.

It is highly unusual for such a meeting to take place and signals a desire by the prime minister to understand the thinking of his top brass.

The meeting came as an external team of experts, led by Lord Robertson, a former Labour defence secretary and former secretary general of NATO, was putting the finishing touches to a sweeping review of defence that the government has said will be published this spring.

The reviewers were tasked with setting out how to transform the army, Royal Navy and Royal Air Force to meet future threats, but their ability to deliver has been constrained from the start by Downing Street saying this must be achieved within a defence spending target of 2.5% of GDP.

A government spokesperson said any suggestion the prime minister was considering raising defence spending beyond 2.5% “is purely speculation”.

The spokesperson said: “The Strategic Defence Review is wide-ranging, ensuring we look hard at the threats we face and the capabilities we need to meet the challenges and opportunities of the 21st century. As we have consistently said, the review will be published in the spring.

“To ensure the UK is prepared to deal with the changing threat, our budget increased defence spending by £2.9bn for next year and we are committed to setting a path to 2.5% of GDP on defence.”

Politics

Italy finance minister warns US stablecoins pose bigger threat than tariffs

Published

8 hours ago

April 16, 2025

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Italy finance minister warns US stablecoins pose bigger threat than tariffs

Italy’s minister of economy and finance warned that US stablecoin policies are more concerning than President Donald Trump’s tariffs, citing the potential for these crypto assets to undermine the euro’s dominance in cross-border payments.

Speaking at an event in Milan, Giancarlo Giorgetti said that while trade tariffs dominate headlines, new US policies on dollar-backed stablecoins present an “even more dangerous” threat to European financial stability, according to a Reuters report.

US stablecoins allow users to invest in a widely accepted method for cross-border payments without opening a US bank account, Giorgetti said. He warned that the growing appeal of US stablecoins to Europeans should not be underestimated.

Giorgetti urged European Union lawmakers to take more steps to boost the euro’s position as an international currency. He added that the digital euro under development by the European Central Bank (ECB) will be essential to minimize the need for Europeans to resort to foreign solutions.

US lawmakers advance stablecoin bills

Presently, stablecoin regulation in the US remains fragmented. Instead of a unified framework, multiple agencies apply existing laws to regulate stablecoins. However, lawmakers are working to implement changes, with several pieces of stablecoin legislation progressing.

On April 2, the US House Financial Services Committee passed the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act. The bill is now headed to the House floor for a full vote.

The bill was introduced on Feb. 6 by Committee Chair French Hill and the Digital Assets Subcommittee Chair Bryan Steil. It would ensure that stablecoin issuers provide information on their businesses, including how their tokens are backed.

In addition, the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act establishes rules that require issuers to maintain reserves backed one-to-one, comply with Anti-Money Laundering (AML) laws, protect consumers and boost dollar dominance in the global economy.

The GENIUS Act still requires approval by both chambers of Congress and a presidential signature before becoming law.

ECB exec renews digital euro push

Apart from Giorgetti, ECB Executive Board member Piero Cipollone also urged European lawmakers to intensify their efforts to combat dollar-backed stablecoin dominance in Europe. On April 8, Cipollone wrote an article expressing concerns about the growing popularity of US stablecoins.

The official suggested launching a central bank digital currency to combat this threat to the euro. He said this would aid in preserving the monetary sovereignty of the eurozone.

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Politics

OKX reenters US market following $505M DOJ settlement

Published

8 hours ago

April 16, 2025

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OKX reenters US market following 5M DOJ settlement

Seychelles-based cryptocurrency exchange OKX announced that it is reentering the US market.

According to an April 16 blog post, OKX will return to the United States market along with the appointment of former Barclays director Roshan Robert as its US CEO. Robert said in the post:

“Today, I’m thrilled to announce the launch of OKX’s centralized crypto exchange and OKX Wallet in the United States, alongside the establishment of our regional headquarters in San Jose, California.“

All existing Okcoin users will be migrated to the new platform, which Robert said will lead to a better overall experience. The promised improvements include deeper liquidity, lower fees and advanced trading tools.

OKX reenters US market following $505M DOJ settlement — *Source:* *OKX*

Step by step

OKX will not roll out the upgrade in one shot. Instead, the new platform will take a phased approach to onboard new customers. The exchange plans to follow the cautious approach with a nationwide launch later in 2025.

“We’re beginning with a phased rollout for new customers to ensure a smooth and secure onboarding process, with a broader nationwide launch planned later this year,“ Robert said.

OKX also promised integrations with local banks and support for major assets, including Bitcoin (BTC), Ether (ETH), USDt (USDT) and USDC (USDC). Robert noted that the company maintains a global proof of reserves for all its assets, which is published monthly by cybersecurity firm Hacken.

Hacken had not responded to Cointelegraph’s request for comment by publication time.

In addition to its trading platform, the firm is also rolling out OKX Wallet to its US-based customers. The wallet supports 130 blockchains and features a decentralized exchange (DEX) aggregator, allowing access to over 10 million tokens on platforms including Ethereum, Solana and Base.

OKX gets out of US troubles

The report follows OKX hiring former New York Governor Andrew Cuomo to advise it over a federal probe that resulted in the firm pleading guilty to several violations and agreeing to pay $505 million in fines and penalties.

The exchange admitted on Feb. 24 to operating an unlicensed money-transmitting business in violation of US Anti-Money Laundering laws. As a consequence, OKX agreed to pay $84 million worth of penalties while forfeiting $421 million worth of fees earned from primarily institutional clients.

After the investigation concluded, OKX said it would seek out a compliance consultant to remedy the problems revealed by the federal probe and improve its compliance efforts. OKX’s CEO Star Xu wrote in a Feb. 24 X post:

“Our vision is to make OKX the gold standard of global compliance at scale across different markets and their respective regulatory bodies.”

OKX had not responded to Cointelegraph’s request for comment by publication time

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Politics

Government claims car interventions will save £500 a year – but only if you hit a pothole

Published

10 hours ago

April 16, 2025

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Government claims car interventions will save £500 a year - but only if you hit a pothole

Hitting potholes is “all too common”, a minister has insisted amid scrutiny of the government’s claim that new road measures will save drivers £500 a year.

Lillian Greenwood told Sky News Breakfast with Anna Jones that people face “eyewatering” costs if a pothole causes more damage to their car than a puncture, with the average repair job setting them back by £460, according to the RAC.

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This, along with the continued freeze on fuel duty, will save drivers over £500 a year, the government has said, claiming its interventions are easing the cost-of-living crisis for drivers.

It was put to Ms Greenwood that the savings only apply if you hit a pothole in the first place.

Asked if she thinks it’s a common occurrence, she said: “Unfortunately, it’s all too common. And because we’ve had more than 10 years of the Conservatives under investing in our road network, that’s left it absolutely cratered with potholes.”

She said potholes are “probably the biggest issue” when she doorsteps constituents, adding: “They’re really angry about the state of their local roads.

“Far too many people are hitting a pothole and finding they’re having to fork out to get their car fixed.”

Earlier this year, an annual industry report estimated that 17% of the local road network in England and Wales are in poor condition.

It predicted that the one-time catch-up cost to clear the backlog of maintenance issues would cost £16.81bn and take 12 years to complete.

Chancellor Rachel Reeves’s autumn budget contained a £1.6bn investment to maintain roads and fix potholes, which it said was an increase of £500m on the 2024-25 budget.

Local authorities will get the first tranche of that money this month.

It comes ahead of the local elections in May, when support for drivers could become a dividing line.

It was put to Ms Greenwood that while trumpeting its motorist-friendly credentials, Labour has also introduced a £1.7bn car tax raid and backed more 20mph low tariff neighbourhoods.

She said the government has left decisions on Low Traffic Neighbourhoods to local authorities and many people “want to see drivers going slower”.

The government’s announcement on savings today came alongside a pledge to remove 1,000 miles of roadworks over the Easter weekend in a bid to cut journey times.