Rishi Sunak is planning to cut defence spending in real terms and break a pledge made in the 2019 Conservative manifesto. Next week it is expected that the Treasury will announce that all departmental spending for the next two years will remain at levels agreed in the 2021 spending review. The Ministry of Defence budget is expected to rise in cash terms from £47.9 billion this year to £48 billion in 2023 and £48.6 billion in 2024.
However with inflation currently at 10 percent and little sign of its fall on the immediate horizon this is likely to mean a real terms decline in defence spending.
Calls for a major increase in defence spending following the Russian invasion of Ukraine have been rejected by the Treasury.
The 2019 Conservative election manifesto on defence spending vowed to “increase the budget by at least 0.5 per cent above inflation every year of the new Parliament”.
Ministers will argue however that by taking the average cost over a five year period the target can still be met.
These real terms defence cuts could complicate Mr Sunak’s tough stance towards Russia.
The Prime Minister is expected to outline his stance towards the Kremlin at the G20 summit in Bali, which starts on Tuesday.
Russia will be represented by Foreign Minister Sergei Lavrov rather than President Vladimir Putin who has decided not to attend.
On Friday evening a backlash against the real terms defence cuts was already brewing.
Last year it was announced that the number of fully trained soldiers would be reduced to 72,500, the smallest British Army ever.
It also remains unclear if Mr Sunak and his Chancellor Jeremy Hunt will stick by the target set by Liz Truss to spend 3 percent of GDP on defence by 2030.