The chancellor is having to make ‘eye wateringly’ difficult decisions ahead of the fiscal statement (Picture: Getty)

Jeremy Hunt may freeze defence spending over the next five years in order to fix the £40 billion hole created by Liz Truss’s mini-budget.

In an attempt to balance the books, the chancellor is considering keeping the defence budget at two per cent for the next four to five years, but raising it to three per cent by 2030, The Times reported.

Any move to row back on higher defence spending pledges will inevitably be seen through the prism of Vladimir Putin’s nuclear threats and ongoing fighting in Ukraine.

The spending freeze could prompt defence secretary Ben Wallace to resign, who has insisted his department’s budget should be a priority for whoever becomes the next Prime Minister.

After announcing that he would not be running for leader of the Conservative Party, Wallace said yesterday: ‘I will be looking to all candidates to recognise you cannot have economic security at home without national security.

‘This requires real investment for our armed forces and intelligence agencies.’

Hitting the three per cent spending target by 2030 would cost an extra £157 billion of national income over the next eight years.

In the 2020 spending review, the defence budget was allocated an extra £16.5 billion over the next four years but the Ukraine situation has put political pressure on the government to review it.

Ben Wallace has threatened to resign if defence spending is frozen (Picture: Anadolu/Getty)

If the 3% target was moved, the increase would be ‘back loaded’ to the end of the decade, according to The Times, but it’s unclear if that would keep Mr Wallace on side.

The defence secretary is reportedly considering endorsing Boris Johnson in the leadership contest.

The chancellor has warned the country he will be required to make ‘eye-wateringly’ difficult decisions ahead of the fiscal statement on October 31.

The chancellor has informed all government departments they will need to find ‘efficiency savings’ and a big U-turn on welfare could be looming.

Prior to Liz Truss’ resignation, the Treasury was reportedly mulling over whether to renege on a promise to link benefits to inflation, a move which would leave society’s most vulnerable worse off in real terms.

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Defence Secretary Ben Wallace has threatened to resign if the budget is not increased.