Deutsche Bank: UK finances may come under pressure, affected by increase in defense spending

Sanjay Raja from Deutsche Bank stated in a report that there are reports suggesting that the UK government is seeking to increase defense spending to nearly 3% of GDP by the end of 2029. In this context, the country's public finances may come under pressure. In recent years, the deterioration of public finances has been due to government spending growing faster than government revenue. Raja mentioned that the plan to increase defense spending may require offsetting through cuts in public spending or tax increases. Public finance data from last Friday showed a fiscal surplus of 30.4 billion pounds in January, higher than the 14.5 billion pound surplus recorded in January 2025.