British Prime Minister Keir Starmer announced a major overhaul of Britain's defense spending on Monday, warning Britain to face a "European War."

“We are taking combat preparations,” Starmer said in unveiling the administration’s highly anticipated “strategic defense review.”

Britain's defense plan includes the construction of 12 new nuclear-powered attack submarines, which could improve the manufacturing of drones, missiles and ammunition and enhance cyber warfare capabilities.

Starmer said that by 2027, Britain's defense spending will rise to 2.5% of GDP and put forward "ambition" to increase it to 3% of GDP in the next parliament, i.e. by 2034 - "when economic and fiscal conditions allow." NATO estimates Britain's defense spending is 2.33% GDP share in 2024, higher than the 2% target of the alliance in 2014.

The Prime Minister said one of the first tasks of the UK is to strengthen the NATO alliance, adding that Britain's defense policy will be "Naturally NATO".

NATO hopes its 32 members will work to devote 5% of GDP to defense and security-related infrastructure by 2032 and will push the target when it comes to contacting it from June 24 to 25.

Analysts and economists believe that while Britain's defense plan is welcome news in uncertain times, they may eventually prove too little, too late - they may have a hard time delivering given Britain's fiscal restrictions

The amount of NATO members spending on defense is the league's ongoing bugbear, as well as U.S. President Donald Trump, some of whom far exceeds the 2% GDP target, while others have repeatedly fallen short of that amount in recent years.

Since Trump's last entrusted power, defense spending for NATO members has increased dramatically among NATO members. In 2018, when White House leaders stimulated the military bloc, only six member states met their 2% target, including the United States. This is compared to 23 members in 2024, according to NATO data.

Although some people have greatly exceeded that threshold, such as Poland, Estonia, the United States, Latvia and Greece, major economic powers including Canada, Spain and Italy are below the contribution threshold.

NATO has not yet met its 5% spending target recommended by Trump or NATO Secretary-General Mark Rutte.

Some NATO allies have reportedly responded to the 2.5% defense spending target of British Defense Secretary Lithuania, with the U.S. Department of Defense reportedly spending 2.8% of GDP on the Department of Defense in 2024 - a figure reportedly told the BBC is "old news."

Starmer also refused to commit to a clear timetable as to when the UK will increase its defence spending to the next parliament (2029-2034) (2029-2034) and told the BBC earlier on Monday that he “will not make a good commitment until I can’t make a good commitment until I can’t make a sure thing about the exact date.”

The European Aerospace and Defense sector welcomed spending plans, with the STOXX 600 Aerospace and Defense Index rising 0.45% on Monday.

But while “the spending plan is undoubtedly certain for the industry…it will be gradual and backward,” Morningstar’s equity analyst Lordana Muharremi said on Monday.

She noted that while Britain's defense program "supports nuclear warhead modernization, expands submarine fleets, expands ammunition production under the Aukus program, and strengthens investment in cyber and long-range strike capabilities, they may still fall into Trump and NATO's broader defense ambitions.

“While the UK government believes these spending goals are sufficient to achieve its national security goals, they may still not have raised expectations for NATO and the United States, with the Trump administration urging to reach 3% faster by 2029.”

Defense experts believe that at the same time, investing more money in the Ministry of Defense will not change itself.

Matthew Savill, director of military science at the Royal Joint Services Institute (RUSI) (RUSI), said before the review: “The spending target of GDP is not so much that it is truly 'transformative' – at least not giving the status quo to the armed forces.”

“To make changes, it will require risking changes in some areas to reduce and reshape the armed forces,” he noted.

He said billions of pounds each year could be applied first to fill gaps in ammunition and other weapons stocks, infrastructure and logistics, and support personnel conditions, salaries and recruitment.

But to make “radicalization of military capabilities, not incremental increases”, he said, would “require some significant choices when the capacity retires early or reduces the number of early retirements.”

“The Department of Defense has been here before, as early losses caused by budgetary pressures have heralded new capabilities.”

Sanjay Raja, a senior economist at Deutsche Bank, and Shreyas Gopal, strategist, said on Monday that while the UK aims to play an integral role in anchoring Europe’s defense and security, “this role will be cost-free.”

"Political and economic trade-offs will be big," they said in a study.

Fiscal restrictions could limit the escalation of the UK’s defense arsenal to the Government Spend Framework.

“As Britain strengthens its defense support – potentially participating in EU programs and expands its capabilities – the Prime Minister faces a slim walk: maintaining credibility, maintaining credibility in financial markets, meeting expectations for NATO and EU defence spending, and meeting public investments in health, education and infrastructure (including other matters).

Analysts said the government's ability to reconcile its strategic ambitions with fiscal discipline in the coming years, noting: "We see that before the end of the parliamentary period, we see that the UK government will need to increase its ambition to increase its defence spending to 3% increased risk."