UK's Reeves: 'All of us must step up' defence spending

LONDON (Reuters) - British Finance Minister Rachel Reeves said on Tuesday that other European nations must follow in her country's footsteps and increase their defence spending.

Prime Minister Keir Starmer announced earlier he would increase annual defence spending to 2.5% of GDP by 2027 and target a 3% level last seen just after the Cold War, a signal to U.S. President Donald Trump that Britain can boost Europe's security.

"This is a generational moment for our continent," Reeves wrote in the Telegraph newspaper. "All of us must step up and do more on defence."

Reeves said she would speak to her European counterparts over the coming days at a G20 meeting in South Africa about the "importance of security and defence for our economies, and how we can work together to bolster them".

The increase would see Britain spending 13.4 billion pounds ($17 billion) a year more on defence in 2027 than it does now, Starmer said, adding the extra money would help rebuild the country's industrial base, create jobs and boost growth.

"If we are to protect our borders, then we need to ensure our defence industry is building the equipment and capabilities we need," Reeves said. "We need modern capabilities here at home that can also be sold to the world."

The increase in defence spending from its current 2.3% will be fully paid for by a 40% cut to international aid, a decision humanitarian charities have criticised.

($1 = 0.7897 pounds)

(Reporting by Catarina Demony; Editing by Lincoln Feast.)