Keir Starmer might be serving his notice as Prime Minister, but he remains capable of making decisions that will bind the country for years to come. Yesterday’s Defence Investment Plan is such a call. The much-delayed program, which cost Starmer a defence secretary a few weeks ago and hastened his exit from Downing Street, has finally emerged.

Included in the plan is an extra £15 billion for defence, meaning a 27% increase within this parliament. The country will spend 2.7% of its GDP on defence by 2029, with an aim to meet the Nato pledge of 3.5% by 2035. New money will largely come from reallocating other Whitehall budgets, including scrapping various road and energy projects. It is less than the MoD asked for and will require tough decisions about how it is spent, but the plan is the most significant uplift promised in years.

The policy presents a real challenge to Britain’s Right-wing parties. While there are always complaints that military spending could go further and move faster to meet rising threats, this sentiment is rarely backed by a clear indication of where the funds should come from. During their time in power, the Conservatives made expressions of long-term commitment from which they knew they could retreat when the time came. An example of this can be seen in Rishi Sunak’s Defending Britain policy paper, which was published in 2024. It pledged to increase UK defence spending to 2.5% of GDP by 2030, but its implementation was scheduled beyond the end of that parliament and included no detailed funding plan.

Reform UK, on the other hand, has often seemed skeptical of Nato and of European partnership on defence. Foreign policy has been a weak point for Nigel Farage, and is one of the areas where polling suggests voters are still aligned with the traditional parties.

These Right-wing parties are now in a tricky position. Labour has set out how it intends to fund defence, and criticising the numbers promised by Starmer’s government is not enough. Reform and the Conservatives need to be clear about what the alternatives are and where the cash might come from if they were to promise more spending.

Further cuts would likely affect day-to-day spending. The most obvious target for the Right is the welfare budget, but it remains unclear how reducing this would work in practice. A large proportion of that budget is now pension spending, which is politically toxic to touch, especially for two parties that rely on the older vote. Alternatively, neither Conservatives nor Reform are likely to countenance higher taxes or more borrowing to fund defence. Without a credible plan to provide more money, criticism risks looking like opposition for its own sake.

Two risks remain for Labour, however. The first is the same problem that has plagued previous announcements: future commitments don’t bind successors. We are a few weeks away from having a new prime minister, along with, most likely, a new chancellor. Future defence commitments may prove vulnerable, especially in the run-up to an election. Voters tend to like defence spending in the abstract but choose things that make a direct impact in their lives when it comes to the crunch. Politicians know this and act accordingly.

The second risk is that the projects and capital spending Starmer is scrapping could come to haunt the Labour Party. The state of the roads and the cost of energy are two things that matter to voters, especially those who lean toward Reform. Scrapping infrastructure projects and reducing capital expenditure comes at a long-term cost and fuels disillusionment with politics.

For Starmer, this might be his last chance to leave a political legacy. The PM has not endorsed the big-spending defence plan that military chiefs wanted, but that was unlikely ever to happen. He has instead made a measured intervention that accepts the realities of the difficult choices. For his opponents, criticisms will have to be similarly grounded in reality. They may, however, still be able to profit from the adverse consequences of Starmer’s call.

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John Oxley is a corporate strategist and political commentator. His Substack is Joxley Writes.

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China is trying to catch up with America on artificial intelligence. The Wall Street Journal has reported that Zhipu AI — one of China’s six “AI tiger” LLMs — has released a new model that can rival leading US systems, including Anthropic’s Mythos, in cybersecurity tasks such as pinpointing security bugs. While this marks a milestone in China’s drive to catch up with Western AI capabilities, strong performance on a single benchmark does not mean it has taken the lead. Chinese models still lag behind their Western counterparts in broader capabilities, such as autonomous operation. Skepticism is therefore warranted before resorting to hysterical conclusions, but complacency about the geopolitical implications of China’s AI advances would be an even greater mistake.

On the infrastructure side, Chinese AI is still constrained by access to advanced chips, with American labs way ahead in computing capacity as well as investment. Analysis from earlier this year suggests that Chinese models are likely to be at least a few months behind those in the US. But they are still continuing to make progress, or that the geopolitical importance of AI will be decided only by whose LLM has ventured deeper into the technological frontier. The practical applications of AI, countries’ to capture foreign markets, and the application of AI into the real economy will matter just as much.

Here, China may hold an advantage. As with its dominance across many critical supply chains, Beijing may not need to produce the most advanced AI systems — only those that are affordable and widely deployable. In doing so, it could consolidate global influence by supplying functional, low-cost AI at scale.

Beijing seems to be pursuing exactly that path, developing an AI “open-source” strategy that offers affordable, widely available AI models for companies and individuals to use and modify as they wish. The production of the DeepSeek AI model, which matched the performance of Silicon Valley tools such as ChatGPT at a fraction of the cost for users, created goodwill among Chinese models with developers.

The four most popular models on OpenRouter, an AI hardware platform for developers, are now all Chinese. The goal for China is not only to win the frontier-model race, but to make its systems the default layer of AI adoption across industries and global markets. For most economies, the choice is increasingly between an affordable tool they can deploy now and a more robust one that may be out of reach.

And while the countries adopting Chinese models may be exposed to political pressure and cyber threats from Beijing, safer and more capable alternatives matter little if they are unaffordable. American AI companies are already under pressure to monetize products whose operating costs are rising. If Chinese open-source models become the cheap default for startups, universities, governments and businesses across the developing world, then America’s AI lead will be eroded from below.

Perhaps more concerning for America in the long run is how AI can give Chinese manufacturing even more strength, through the ongoing integration of AI as a general-purpose technology. China’s new Five-Year Plan mentioned AI more than 50 times and includes an “AI+” action plan aimed at spreading AI across the economy.

Beijing has been pioneering automation of its critical infrastructure for years, with promising recent results in increasing warplane production capacity. In that regard, China’s open-model strategy and manufacturing dominance will reinforce each other. Cheap, adaptable models accelerate deployment across the real economy while those deployments generate real-world data and use cases that can feed back into further model improvement.

The United States should not dismiss the importance of its lead in the AI race. That lead worries Beijing, not least because a more automated Chinese economy would also become more vulnerable to AI-generated cyber threats. But nor should Washington assume that China cannot catch up with American capabilities over time.

This AI competition represents part of a broader struggle over tech supply chains and geopolitical influence. Decisions over whether to adopt US or Chinese models could produce a more fragmented global reality, with different regions relying on different cloud providers, chips and security structures. The result will likely be a global economy which is divided into competing spheres, rather than one which produces a single winner.

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Miquel Vila is a political and geopolitical risk consultant focusing on industrial strategy, critical infrastructure and global supply chains.

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