There have been recent media reports that US officials have urged the Ukrainians to open up communication channels with the Kremlin, though Washington denied they were pushing for peace talks.
A backlash on the lack of defence spending increases was emerging on Friday night.
General Lord Richard Dannatt, the former head of the army, told The Telegraph: “The Government has to cut public expenditure in order to balance the books as it is reluctant to raise taxes, but it does seem incredible that with a land war in Europe it feels it can cut the defence budget.
“Given that we have had 2.5 per cent and 3 per cent waived under defence planners’ noses, now to be cutting it to 2 per cent or under, it makes you wonder how on earth you can plan anything sensible for the future.”
Talks underway over size of army
The Telegraph understands that inside the Ministry of Defence some discussions have already begun about whether the real terms spending cut means the army needs to become even smaller.
Last year it was announced that the number of fully trained soldiers will be cut to 72,500, the smallest size of the UK army on record.
It remains unclear whether Mr Sunak and Jeremy Hunt, the Chancellor, will stick by the target set by Liz Truss to spend three per cent of GDP on defence by 2030.
The current Nato target is two per cent, which Britain has been exceeding. Boris Johnson had announced hopes to raise that target to 2.5 per cent before he left office earlier this year.
But even if ministers say the three per cent target remains a broad ambition, no pathway to hitting the goal is expected to be set out in the Autumn Statement, to be announced on November 17.
Analysis suggests that to reach the target the MoD budget would have to jump from around £48 billion this year to £93 billion in 2030, just as a major Whitehall spending squeeze is coming.
Justifying the defence spending cuts could be politically complicated for Mr Hunt, who in his Tory leadership campaign this summer promised a major increase if he won.
On Friday, Mr Hunt stressed the financial challenges ahead given soaring inflation and interest rates and new economic figures suggesting the forecasted UK recession has already begun.
Mr Hunt said: “What we need is to put that plan in place. It’s not going to be easy, there are going to be some very difficult choices. I’ve used the word ‘eye-watering’ before and that’s the truth.”
Sticking to the Spending Review decisions from 2021 means that department spending levels will stay as agreed in 2023 and 2024, despite inflation eating into the budgets.
Wallace plays down defence spending increases coming soon
For the years of 2025, 2026 and 2027 the Treasury is not expected to announce departmental budgets next week. Yet major spending squeezes will be signalled nonetheless.
The overall government departmental spending is expected to rise by just one per cent a year in that period, much lower than the 3.5 per cent of the preceding years.
Earlier this week, Mr Wallace appeared to play down the possibility of new defence spending increases coming any time soon.
Mr Wallace said: “My determination is to deliver a modernised defence, Armed Forces and continue to invest in them. And therefore I need that capability to do so.
“Three per cent, 2.5 per cent targets at the end of the decade is not something that’s right in front of me in the here and now. The here and now is I need continued investment to not only support Ukraine but also to support that vital modernisation.
“We’ll take it each budget as we come. There’ll be a budget sometime in the spring. And we’re negotiating in the very short term period between now and then to see what we can do. To influence our budget and to protect us from the impacts of inflation.”
A Ministry of Defence spokesman declined to comment.
