UK military generals have been asked to find £3.5bn of savings with fears Sir Keir Starmer is leaving the country ‘unprepared for war’.
The heads of the British Army, Royal Navy and Royal Air Force will meet next week to find ways they can find ‘efficiencies’ despite threats erupting in the Middle East, Sky News reported.
The Ministry of Defence will have to operate under the budget decided by the Treasury, as other departments, a source told the broadcaster.
Former Nato chief Lord George Robertson will say Sir Keir’s ‘corrosive complacency’ must end in a speech.
The former Labour defence secretary, who led the Government’s Strategic Defence Review (SDW), accused ministers of being unwilling to make the necessary investment. He has served as a senior counsellor at The Cohen Group, which secures contracts for the US military, for more than 20 years.
In the speech, he will say: ‘We are underprepared. We are underinsured. We are under attack. We are not safe… Britain’s national security and safety is in peril.’
The former Labour defence secretary, who led the Government’s Strategic Defence Review (SDW), accused ministers of being unwilling to make the necessary investment.
The International Monetary Fund also revealed in a report that the UK will suffer the worst damage from the war in Iran out of all the world’s advanced economies.
Growth forecasts for the next two years have been slashed compared to those from before the war began at the end of February.
Inflation in the UK is also set to be higher than previously expected, as the IMF says the global economy could be knocked ‘off course’ by the conflict.
Reacting to the new World Economic Outlook, Chancellor Rachel Reeves said the Iran war is ‘not our war’, but it will nevertheless ‘come at a cost to the UK’.
She added: ‘These are not costs I wanted, but they are costs we will have to respond to.’
According to the IMF forecast, growth in the UK will be 0.8% in 2026, down from 1.3% the last time the international body issued a prediction in January.
That 0.5% drop is the largest in the G7 group of nations, though the updated figure is still higher than the predicted growth for Italy and Japan.
Inflation in the UK is also set to be the joint highest for the next two years – tying with the US on 3.2% this year, and with Italy on 2.4% in 2027.
The Bank of England’s target rate for inflation is 2%.
In its report, the IMF predicts UK inflation will head towards 4% this year before falling back to the target by the end of 2027.
Shadow Chancellor Sir Mel Stride said Reeves has ‘no one to blame but herself’ for the downgrade in growth.
He said: ‘Her “plan” to keep costs down has left us with the highest inflation in the G7, with businesses closing and the cost of living skyrocketing.’
In an interview with the Mirror today, Reeves said she felt ‘very frustrated and angry’ with the US for going to war ‘without a clear exit plan, without a clear idea of what they were trying to achieve’.
Last month, the Institute of Grocery Distribution (IGD) said the average UK household could be spending £340 more on food and drink this year due to the impact of the Iran war.
Money & Markets Editor
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