LABOUR’S £11 billion defence spending hike was likened to burning money by an economist today after official figures showed a “very worrying” unexpected fall in the economy.

Chancellor Rachel Reeves announced that Ministry of Defence spending will rise from 2.3 to 2.6 per cent of gross domestic product (GDP) by 2027 in her spending review on Wednesday.

The government forecast that it will be spending an additional £6.4bn on defence in 2027 to reach the target.

Michael Burke, of the Socialist Economic Bulletin, said that today’s Office for National Statistics (ONS) reports that the economy shrank by 0.3 per cent in April showed the country was in desperate need of investment.

He added Ms Reeves had “misnamed” the increase in defence spending as an investment because, unlike spending on transport or manufacturing, the weapons created by defence do not feed back into the economy.

The ONS figures showed the biggest monthly contraction in GDP since October 2023 and were worse than the 0.1 per cent fall most economists had expected.

The Chancellor acknowledged the reduction was “disappointing,” and blamed “uncertainty” caused by Donald Trump’s announcement of sweeping tariffs at the start of April for much of the fall.

Mr Burke cautioned the Morning Star that monthly GDP figures are “chaotic” and the —0.7 per cent growth in the first quarter of the year was recently touted by the government as the highest in the G7.

Looking at yearly trends, he said: “On that measure this April is just 0.9 per cent higher than the same month a year ago — that means the economy is not falling off a cliff but it is slowing down, which is very worrying.

“If we look at the spending review there’s not nothing to boost growth so the pressure on living standards is going to continue.

“What boosts growth over the short or long term is investment — and the level of investment was pathetically low.

“What the documents actually show is a very small rise in investment but most of that is in defence and even that most of it is misnamed.

“A missile can only destroy… you might as well fill a suitcase with £50 notes and burn them for all the positive effect they will have on the economy.”