Faisal Islam
Economics editor

John Healey’s resignation reflects some bruising internal negotiations with the chancellor over finding the money to fund the defence investment plan. The now former defence secretary confirmed that the level of spending would reach 2.68% of GDP by 2030.

His letter also acknowledged that other departments would face some cuts against their plans. It is thought that this is a reference to the capital budgets for transport and energy, among other things. Defence spending, on heavy equipment and technology, is very capital intensive.

A Treasury source told the BBC that Chancellor Rachel Reeves will "always do what is right and needed to keep this country safe".

The source pointed to a "record uplift in defence spending at the spending review”, and said Reeves would be "working alongside the PM deliver billions more to fund the defence investment plan in full".

As leadership speculation looms over the government, it is worth noting that Greater Manchester Mayor Andy Burnham previously suggested that some defence spending could be exempted from fiscal rules, as has occurred in Germany.

His advisers have suggested this may occur over a longer time period, only after the UK balances its budget.

The Spanish PM Pedro Sanchez, who publicly refused to meet the 3.5% Nato target, is now publicly citing this move as one of the reasons behind Spain’s strong economy.