Tax hike warning as Nato demands Britain spends 3.5% on defence

Voters were warned last night to brace for further tax rises after Nato spending demands blew a £40billion hole in Labour’s plans.

Nato chief Mark Rutte has told Keir Starmer and other leaders that the alliance later this month will raise its minimum spending target from 2 per cent of GDP to 3.5 per cent by 2035 to deter Russia’s Vladimir Putin and placate US President Donald Trump.

Military sources said it would be ‘unthinkable’ for Britain to refuse the demand given its leading role in Nato.

But experts claimed the bill could eventually run to £40billion a year – the same amount raised by Chancellor Rachel Reeves in her controversial Budget last year and equal to 5p on the basic rate of income tax.

Defence Secretary John Healey refused to rule out tax increases to help fund the push to move Britain to a position of ‘war-fighting readiness’ but said ministers would ‘set out how we’ll pay for future increases in the future’.