Chancellor Rachel Reeves has indicated that she is ready to reduce portfolio chains to strengthen the British armed forces, a step that will increase the pressure on the tense public affairs in the country.

After Prime Minister Sir Kerr Starmer said that Europe should have to do so Increase defensive spending After pressure from US President Donald Trump, Rivers indicated that she would have to rethink her plans.

“It is clear that the world is changing,” said an ally Refiz. Governments must adapt to a changing world. Rachel takes place seriously – the safe economy requires a safe defense. “

Britain spends 2.3 percent of GDP on defense and promised Starmer to clarify a “road” to increase this to 2.5 percent, at a cost ranging between 5 billion pounds and 6 billion pounds annually – equivalent to about 10 percent of the basic school budget in England.

He wants defense heads It rose to 2.65 percent About 10 billion pounds each year than the current budget, a step that has been rejected so far by Downing Street.

Reeves colleagues insist that she is working “incredibly closely” with Starmer, who will face questions about the United Kingdom’s defense budget when Trump meets Washington next week.

But what are Reeves options?

Change financial rules

Reeves is installed through its borrowing rules, which it adheres to the current budget budget-the match all daily spending with revenues-by 2029-30. Its budget in October is planned to meet this rule with 9.9 billion pounds to spare it, only 0.3 percent of GDP.

Those risks It is eliminated By weak economic data in the past few months, especially weak growth. If Reeves should find at least 5 billion pounds of defense, this means that she will have to find about 15 billion pounds to return to the first box.

European Commission plans to Bending its financial rules The Convention on Stability and Growth-to exempt defensive spending, allowing the European Union states that suffer from financial distress to borrow more to build armies.

Can Reeves do the same? Given that it only announced its financial rules in October and repeatedly described it as “Clad Iron CAMED”, the markets will take a low view if it is rewritten now. The counselor team said on Tuesday that the rules were “prominent”.

Other areas of public spending

Whitehal was ready for a brutal public spending round, and reached its climax in June, when the Treasury Ministry requested “unprotected” departments – including the Ministry of Interior and the Ministry of Justice – ready for potential discounts over three years ranging between 2 percent and 11 percent.

The treasury always determines the eye water scenarios for saving at the beginning of a spending round to force the ministers to make a list of discounts, but the pressure to increase defense spending has put nerves.

Given that “unprotected” departments include police officials, prisons, immigration and local government, Starmer and Reeves face a dark option in the next few months. “These discounts are completely not achieved,” said a person involved in the talks.

Starmer promised that there would be no return to austerity under the government of the Labor Party, yet this is exactly the same departments that were targeted for the most cuts under conservative counselor George Ospurne in 2010.

Delay in raising defense spending until after the upcoming elections

Reeves was seeking to hold defensive spending by about 2.3 percent for as long as possible, according to the people who were informed of the discussions, but the last Starmer letter made any great delay seemed impossible.

He described a “generations” challenge for Europe, as Trump threatens To withdraw American military support For the continent, he urged UK’s neighbors to “escalate” and start spending more on the defense.

Delaying access to the goal of defense spending in the United Kingdom by 2.5 percent of GDP after the upcoming general elections, expected in 2029, will be at odds with this and can cause criticism from Trump.

Taxes

Reevis has Do not exclude the tax increase In its spring statement on the economy on March 26. One of the options being discussed is a continuation of the freezing of income tax thresholds and allowances after 2028, a step in which Reeves looked at its budget in October because it “will harm the working people.”

The Institute of Financial Studies, which the intellectual suffocating says that the frozen income tax thresholds from 2028-29 will bring about 3.5 billion pounds-4 billion pounds annually, assuming inflation by 2 percent.

It would cover most of the cost of lifting defensive spending to 2.5 percent of GDP. Reeves can seek to justify this tax transition by saying that the world has become a more dangerous place.

Innovative solutions

Several ambitious ideas have been shown to new multilateral financing institutions for UK officials in recent months.

General Sir Nick Carter, former British Army Chairman, from a group that has proposed a “armament bank” to benefit from the savings gathering in Europe, similar to the European Bank for Reconstruction and Development.

Member States will provide their capital – a proposed container of 100 billion euros – but it pays only 10 percent at the foreground, with the bank’s remaining bank borrowed, with the help of a strong credit rating.

Its supporters have argued that such a bank, which will be open to the United Kingdom and Norway As well as the European Union countriesIt will be “a quick and effective way to meet the urgent need for high defense spending.”

Meanwhile, Rob Murray, the founder of the NATO Innovation Fund, made proposals for the defense, security and flexibility that will be open to a wide range of global partners outside Europe and aims to benefit from the broader capital markets to help finance the goals of the goals.

Both ideas require enthusiastic support from international allies to get out of the ground.