Video report by ITV News Political Correspondent Carl Dinnen
The UK is setting up "RAF Space Command", a wing of the Armed Forces which will be capable of launching Britain's first rocket as early as 2022, the prime minister has announced.
Boris Johnson said a military investment of £16.5 billion will also fund the development of Artificial Intelligence and a National Cyber Force aimed at targeting terrorism, organised crime and hostile state activity.
Mr Johnson said "defence of the realm must come first" as he announced the biggest investment in the UK's military since the end of the Cold War.
He promised to “end the era of retreat” with an investment which amounts to 2.2% of GDP - more than any other Nato ally except US.
The PM set out a four-year financial deal for the Ministry of Defence (MoD) to “transform” the military, developing cutting-edge capabilities in the future battlefields of cyber and space.
He said the investment will, among other things, will "safeguard hundreds of thousands of jobs in the defence industry" and "restore Britain's position as the foremost naval power in Europe".
Where will the money come from?
Labour leader Sir Keir Starmer welcomed the billions in extra funding but asked where it will come from.
He said: "We welcome this additional funding for our defence and security forces and we agree that it is vital to end what the prime minister calls - I have to say, with complete lack of self-awareness - an era of retreat. But this is a spending announcement without a strategy.
Sir Keir added: "Next week the Chancellor will have to come here and set out the consequences of that. So can the prime minister tell us today, will the commitments he's made require additional borrowing, mean tax rises - if so, which ones - or will the money have to come from other departmental budgets?"
The prime minister did not provide a direct answer but questioned Sir Keir's support for the armed forced.
He said: "Mr Johnson responded: "Well of all the humbug I've heard from (Sir Keir), I think that really takes the cake. This was a man who campaigned until December last year to install in government a prime minister who would have wanted to scrap our armed services and pull out of Nato.
"And his own record of support of our armed services (is) very, very thin indeed."
The UK has already spent billions in borrowing during the coronavirus pandemic and there have been suggestions the foreign aid budget could be slashed by more than £4 billion in a bid to raise money.
Mr Johnson, challenged at Prime Minister’s Questions over reports that plans are being drawn up to pare back the UK’s commitment to spend 0.7% of national income on overseas aid to 0.5% in next week’s Spending Review, said only that the UK would “continue” to tackle global poverty.
The prime minister’s defence announcement comes as a relief for military chiefs, who have been pressing for a multi-year settlement to enable them to plan effectively for the future.
It is thought their demands were being resisted by the Treasury, with Chancellor Rishi Sunak holding out for a one-year deal – along with the rest of Whitehall – in next week’s spending review.
“I have taken this decision in the teeth of the pandemic because the defence of the realm must come first,” the prime minister said.
“The international situation is more perilous and more intensely competitive than at any time since the Cold War and Britain must be true to our history and stand alongside our allies. To achieve this we need to upgrade our capabilities across the board.
“This is our chance to end the era of retreat, transform our armed forces, bolster our global influence, unite and level up our country, pioneer new technology and defend our people and way of life.”
The spending commitments have been made despite reports that the Spending Review will reveal that the UK’s economy will contract by almost 11% in 2020, the worst annual performance for more than three centuries.
Meanwhile, Mr Johnson’s armed forces announcement marks the first phase of the Government’s Integrated Review of the UK’s foreign, defence, development and security policy, with the final conclusions due to be unveiled next year.
Washington’s acting secretary of defence, Christopher C Miller, said in a statement the US “applauds the announcement”, which he added would ensure “the UK military continues to be one of the finest fighting forces in the world”.
“Their commitment to increased defence funding should be a message to all free nations that the most capable among us can – and must – do more to counter emerging threats to our shared freedoms and security,” Mr Miller said.
The move will be underpinned by an additional £1.5 billion investment in military research and development with a commitment to invest further in the Future Combat Air System to develop the next generation of fighters for the RAF.
Downing Street said that together, the various projects were expected to create up to 10,000 thousand jobs a year across the UK.
Defence Secretary Ben Wallace said: “This is excellent news for defence, and provides us with the financial certainty we need to modernise, plan for the future and adapt to the threats we face.”