Millions of people in the UK face even higher taxes to fund more defence spending so Britain can protect itself from the threat from Vladimir Putin and other countries, says a leading economist.
Paul Johnson, former director of the Institute for Fiscal Studies, predicted that taxes may be raised again ahead of the next general election, expected in 2029.
Mr Johnson, now Provost at Queen’s College, Oxford, believes the alternatives are big cuts to other public spending in the run-up to an election or Chancellor Rachel Reeves playing “faster and looser” with her fiscal rules to borrow more, both of which are unlikely.
The top economist raised the prospect of more tax hikes as Sir Keir Starmer said the UK “needed to go faster” on increasing defence spending.
Speaking on a visit to a community centre in London, Sir Keir was asked if the Government will bring forward its target to increase defence spending to 3% of GDP to 2029.
The Prime Minister said: “Over the weekend, I was making the argument at the Munich Security Conference that we, the UK and Europe, need to step up when it comes to defence and security.
“We have a threat of Russian aggression, in a few days time it’s the four-year anniversary of the start of the conflict in Ukraine.
“We want a just and lasting peace, but that will not extinguish the Russian threat, and we need to be alert to that, because that’s going to affect every single person in this room, every single person in this country, so we need to step up.
“That means on defence spending, we need to go faster.”
Britain is deploying its carrier strike group to operate alongside the US, Canada and other Nato allies in the Arctic, Sir Keir announced just days ago.
Putin’s Russia has been accused of increasingly testing Nato’s resolve and engaging in “grey warfare” including by sending a spy ship to reportedly map underseas cables and pipelines around Britain.
The latest Nato estimates show Britain spent 2.3% of GDP on defence in 2024, above the 2% guideline by the military alliance.
But together with other European countries, the UK has come under pressure from Donald Trump to spend more to protect the continent.
Struggling with high debt and spending commitments, the Government last year cut its international aid budget in order to fund the hike in defence spending to 2.5% of GDP by 2027.
Britain’s Budget watchdog, the Office for Budget Responsibility, said last year that increasing spending to 3% of GDP would cost an addition £17.3 billion in 2029-30.
Ministers had said they would seek to reach the 3% target in the next Parliament.
But Sir Keir has now signalled that this aim is being fast-tracked.
However, Mr Johnson stressed that getting to 3% by 2029 would eat up all of “the scope”, if not more, in the public finances and could mean “really big cuts” in other parts of public spending.
“That is clearly not going to happen a year or two before an election,” he told Times Radio, with the nation already being hit with the highest tax burden since 1948.
“So there are only two ways this can happen.
“One is that they play even faster and looser with their fiscal rules and borrowing more than they otherwise would have done, or they increase taxes.
“We might get lucky, there might be more money knocking around in a couple of years’ time than we currently expect.
“But on current forecasts, I think this probably just means higher taxes than currently planned.”
The head of Britain’s armed forces and his German counterpart, though, have stressed the “moral” case for rearming against the threat of Russia.
Air Chief Marshal Sir Richard Knighton, the UK’s Chief of the Defence Staff, made the case for investing more in defence alongside General Carsten Breuer, Germany’s Chief of Defence.
In a joint letter published in the Guardian and German newspaper Die Welt, the pair of senior soldiers said they were speaking “not merely as the military leaders of two of Europe’s largest military spenders, but as voices for a Europe that must now confront uncomfortable truths about its security”.
They warned Russia has “shifted decisively westward” amid its invasion of Ukraine, and suggested there was a need for a “step change in our defence and security” across Europe.
