A new report from the Resolution Foundation suggests that the UK government faces a significant fiscal challenge if it intends to meet its commitment to increase defence spending to 3.5% of GDP by 2035. The thinktank argues that the scale of the required investment is such that the government may need to consider raising taxes on middle-income earners to generate the necessary revenue.

Chancellor John Healey, who previously resigned from a government post over concerns regarding inadequate defence funding, is now tasked with managing the budget. While Labour has pledged to reach the 3.5% target, Healey has indicated that he will not outline a specific funding strategy until the next spending review. This approach delays a definitive answer on how the government intends to balance its fiscal policy with its military spending ambitions.

The report, titled 'Thin End of the Wedge,' highlights the tension between maintaining public services and meeting international defence obligations. While the thinktank presents the tax increase as a potential necessity for achieving the stated defence goals, the government’s current stance remains one of caution, prioritizing the formal spending review process over immediate policy shifts. The debate underscores the broader economic difficulty of funding long-term strategic goals without placing an undue burden on the taxpayer.