Economists expect the OBR to use its Budget analysis to warn about the spending pressures facing the government, including the cost of raising defence spending to 3% of GDP, City AM reports. This is analyst prediction, not a statement from the OBR.
City AM says the Chancellor, John Healey, faces a Spending Review next year in which he will set out a route to 3% of GDP on defence. It puts the cost at up to about £11bn more a year but does not give a source for that figure.
Under current plans, City AM says, real-terms spending growth falls to about 0.3% in 2029-30, down from 2.6% in 2025-26. It attributes to unnamed think-tank researchers the view that tax rises of dozens of billions would be needed to keep spending growing faster. These figures have not been independently checked.
City AM says the OBR gave a similar warning in the report alongside Jeremy Hunt's 2024 Budget, when it said spending totals were subject to significant upward revisions around Spending Reviews. ITEM Club economist Matt Swannell told the paper:
"plausible that this could happen again, potentially paving the way to a broader fiscal policy overhaul in 2027"
The Treasury said it would not comment on "speculation". The Budget is on Wednesday 28 October.