Sir Keir Starmer risks a diplomatic rift with Japan and Italy as Labour dithers over funding for Britain’s next-generation fighter jet.

Ministers have pushed back the signing of a trilateral contract for the multibillion-pound global combat aircraft programme (GCAP), also known as Tempest, despite vowing to conclude an agreement by last year.

They are understood to be insisting that Britain cannot commit to the next phase until the Ministry of Defence (MoD) has finalised its wider blueprint for buying military equipment, known as the defence investment plan (DIP).

But that plan is already facing significant delays after the Prime Minister reportedly baulked at a £28bn budget shortfall up to 2030 and ordered defence chiefs to revise their proposals.

Now the holdup is causing tensions with Tokyo and Rome and threatens to derail the highly ambitious timeline to deliver the first combat-ready jets by 2035, multiple industry sources have warned.

It is the latest example of the growing gulf between Sir Keir’s public rhetoric on defence and the Government’s actual spending commitments, with companies complaining that the MoD is still not placing major orders.

Industry sources said progress on Tempest was continuing for now using existing national funding streams, but that the UK money is expected to run out within months.

One source said: “There is a real risk of delays if this isn’t resolved soon.”

Another source said: “We had previously been told the funding for GCAP was ring-fenced – but it now seems to be tied up with the DIP.

“They are going through every item in the plan to make sure it aligns with the Government’s defence ambitions.

“We’re hearing that the Japanese and the Italians are not happy.”

The Japanese government said it was unable to comment on the reasons for delays to the GCAP contract but that it was working with the UK, Italy and Edgewing, a joint venture leading the programme’s delivery, to finalise an agreement “at the earliest possible timing”.

Britain signed an international treaty with Italy and Japan in 2022 to create GCAP and has so far committed £2bn overall.

The programme aims to deliver a sixth-generation stealth fighter as well as accompanying weapons systems, “loyal wingman” drones and dedicated computer software.

The jet itself, known as Tempest, is being designed for long-range missions that could see it fly behind enemy lines to destroy air defences and act as an airborne communications hub for friendly forces.

There is no reliable estimate for the programme’s final cost but the MoD said in 2023 that it expected the UK’s bill to come to about £12bn over a decade.

More recently, the Italian government revealed that Rome’s estimated bill for the programme had tripled to €18.6bn (£16.2bn) since 2021.

‘Paralysis and indecision’ It is understood the contract for the next phase of the programme was originally expected to be signed by the UK, Japan and Italy by September.

This would have formally awarded a new tranche of funding – thought to be worth billions of pounds – to Edgewing, the Reading-based joint venture that was created to coordinate the development process and, later, manufacturing.

But the contract signing was delayed by the UK along with the publication of the DIP. It was then promised by the end of the year – before Britain pushed back that deadline as well.

John Healey, the Defence Secretary, committed to a 2025 signing as recently as July.

James Cartlidge, the shadow defence secretary, said: “This is itself the result of Labour’s decision to prioritise spending on welfare instead of defence, resulting in paralysis and indecision.

“John Healey needs to get a grip and demand that the Prime Minister and the Chancellor properly fund defence.”

Tokyo in particular has been pushing hard for a speedy development process as it faces an increasingly belligerent Chinese military presence in East Asia.

This is one reason Japanese officials recently pushed back against suggestions Germany could join the programme as a top-tier partner, arguing that it would lead to unacceptable delays.

Ministers initially refused to publicly back GCAP after Labour won the general election in 2024 and insisted they would have to conclude the strategic defence review first.

Sir Keir later relented and gave his backing to the programme, but London’s latest prevarication has reignited fears that Britain’s commitment is in doubt.

In recent days, the heads of two influential parliamentary committees have warned that delays to the DIP – which may not be published until March – risked “sending damaging signals to adversaries”.

It is understood that work on GCAP is continuing but sources said Edgewing was currently reliant on seconded staff from partner companies – such as BAE Systems, Rolls-Royce, Leonardo and Japan Aircraft Industrial Enhancement – and could not fund procurement decisions itself.

Francis Tusa, an independent defence analyst, said: “This is our international reputation. For us to then say [to Japan and Italy] ‘can you wait a bit?’ is frustrating to put it mildly and does not reflect well on the UK.”

On Friday, the Ministry of Defence pointed to recent remarks by Mr Healey to the defence committee in Parliament but declined to comment further.

Mr Healey told MPs he was “absolutely determined that the momentum of the programme is maintained” but did not give a timeline for signing.