The government is to spend a staggering £160million less than forecasted on a vital programme.
News about the next generation fighter programme comes just days before will announce her highly anticipated Budget.
The project, known as the Global Combat Air Programme (GCAP), is deemed to be highly important during a period of global instability and fears of war.
Luke Pollard, the Armed Forces minister, said in a written parliamentary answer that the project hasn't been scrapped altogether, with the funding being reduced instead to £1.3 billion - a decrease of £160 million.
He said: "At the start of this financial year, it was expected that the Ministry of Defence would spend up to £1.46 billion.
"The forecast was reduced to £1.3 billion due to revised estimates of programme activity from industry throughout the year."
Mr Pollard was responding to the shadow defence secretary, James Cartlidge, who accused Labour of "cutting" GCAP, a move that "sends to our adversaries".
He told : "With the threats we face - from 's continued aggression, to Iran and its proxies in the Middle East - we should be urgently boosting defence spending, not cutting it.
"Cutting a key capability like GCAP is bad for jobs and businesses around the UK and sends entirely the wrong message to our adversaries.
"The Government needs to by setting a clear path to 2.5 percent in the Budget later this month."
Before the election, Labour pledged to increase military spending to 2.5 percent of the country's GDP "as soon as possible", though it has already been this figure.
An MoD spokesperson maintained that the GCAP hasn't been cut and the funding was agreed upon by the defence industry.
They said: "These claims are false - the revised forecast was the result of joint MoD-industry planning. Positive progress continues developing a future fighter jet, due to take to the skies by 2035.
"The UK has invested over £2 billion already in the Future Combat Air System programme and the associated R&D programme."
GCAP was launched in 2018 by the UK, Italy, and Japan in order to develop a new stealth fighter jet to replace the current Eurofighter Typhoons by the 2030s.
In July, Pollard raised alarm bells when he said the project's future depends on Labour's defence review, which responded to by saying that it was "a really important programme".
The were due to increase the defence budget every year until it reached 2.5 percent of the country's GDP in 2030, but Labour has refused to match this, with Starmer merely saying the 2.5 percent target will be reached "in due course".
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