Britain will spend billions of pounds more on defence in the next decade to ensure the country can prepare for what Keir Starmer called a “dangerous new era” in world history.

On the eve of his crucial trip to Washington to meet Donald Trump, the Prime Minister announced he would meet the target to spend 2.5 per cent of GDP on defence by 2027, several years earlier than the Treasury had been pushing for.

The UK will then increase this figure to 3 per cent over the next parliament, which defence experts said would lead to a “transformation” in how the armed forces fight.

As part of the Strategic Defence Review, military chiefs have been calling for an Iron Dome-style missile defence system for the UK as well as state-of-the-art AI drones to equip Britain for the worst period of global instability since the end of the Cold War.

Type 26 frigates will also be among the equipment sought by the military once the funds reach them.

The “spend switch” will be funded by cuts to the international development budget, a move condemned by aid charities and MPs.

After Starmer announced the decision in the Commons, US defence secretary Pete Hegseth tweeted that it was a “strong step from an enduring partner” in what will be seen as crucial backing for the UK strategy from the Trump administration.

Starmer said the biggest increase in defence spending since the end of the Cold War in the 1990s was needed to combat the threat to the UK and Europe.

The uplift to 2.5 per cent is expected to fund gaps in capacity and could cover the likely deployment of UK peacekeeping troops to Ukraine, although government insiders declined to comment on what they said was a hypothetical question on peacekeepers.

Another Government source said that the UK would need to hit 3% defence spending before it was war-ready and said today’s announcement was a “welcome step” in that direction.

“It’s a genuinely historic announcement and really well-timed,” they said.

Malcolm Chalmers, deputy director general of RUSI, said: “This announcement marks the largest sustained increase in the defence budget since the war – exceeding in length the short-lived boost during the Korean war, and in both length and magnitude the increase during the first years of Mrs Thatcher.

“A large part of the initial increase to 2.5 per cent is likely to be needed to fill gaps in existing, but underfunded, programmes, as well as addressing urgent shortfalls in readiness and munitions.

“The commitment to 3 per cent by the mid-2030s is enormously significant, giving the armed forces and defence industry the ability to plan for the long term.

“This has the potential to increase the effectiveness with which the MoD budget is spent, as it moves away from the stop and start that has been so damaging in the past. In order to reap this dividend, though, the MoD will need to ensure that it does not overcommit its budget as it has done so often in the past.

“The 3 per cent target provides an opportunity to finance a transformation in how our military fights, ensuring that innovation is not always squeezed out by spending on big platforms.”

The Prime Minister insisted the uplift would also boost economic growth as he revealed the spending hike alongside his Chancellor Rachel Reeves, who had been pushing for a delay to the 2.5 per cent target.

He admitted that cutting the aid budget was a “hard choice”, but added: “The realities of our dangerous new era mean that the defence and national security of our country must always come first.

“That is what I campaigned on in the general election. It is what we are delivering today, a new approach on defence, a revival of our industrial base, a deepening of our alliances, the instruments of our natural power brought together, creating opportunity, assuring our allies, delivering security for our country.

“At moments like this in our past, Britain has stood up to be counted. It has come together, and it has demonstrated strength. And that is what the security of this country needs now, and it is what this government will deliver.”

Starmer claimed the extra spending on defence by 2027 would lead to £13.4bn extra in cash terms from what is being spent now – from £66.3bn to £79.7bn.

But after being challenged by the Institute for Fiscal Studies that the real uplift would be closer to £6bn, government sources admitted that the larger figure would only be under a scenario where MoD spending would be flat between now and 2027, if the funding target had not been brought forward.

At a press conference in Downing Street, Starmer denied that he had been “bounced” by Trump into announcing an acceleration of defence spending, but admitted that Trump’s demands for Europe to do more to increase its own security had shaped his thinking.

He added: “In our heart of hearts, we all know that this decision has been coming for three years since the beginning of the conflict in Ukraine.

“The last few weeks have accelerated my thinking on when we needed to make this announcement, and I’ll be very clear about that.”

Starmer said the decision had been “three years in the making” but that he had “pushed our system” to make the decision now.

The PM confirmed reports that he will host European leaders in London for an emergency summit on the Continent’s defence posture this weekend.

He also repeated the UK’s commitment to “putting our boots on the ground” in Ukraine, subject to backup by Washington.

The policy to cut aid spending to fund an increase on defence was a policy of Reform at the last election.

Asked if he was “Nigel Farage in disguise”, Starmer accused the Reform leader of “fawning over Putin, that’s not patriotism”.

Tory leader Kemi Badenoch said she had written to the Prime Minister over the weekend suggesting he cut aid spending to increase the defence budget.

Senior research economist at the IFS Ben Zaranko accused Starmer of “reaching for a bigger number” to make his announcement “sound more dramatic” for Trump.

He told Times Radio: “The reason why he’s run into trouble is he’s doing what politicians always do, which is when they’re announcing something, they reach for the largest possible number. In this case, that’s £13bn, a number which makes sense as far as I can tell, only if you think that otherwise defence spending would have been frozen in cash terms and would have been declining as a share of GDP.

“So he’s reaching for a bigger number to make his announcement, perhaps one aimed at the US President, sound more dramatic, but I think that he’s come unstuck by using numbers which don’t quite cohere across the board.”