Appearing before the Commons Defence Committee, Mr Wallace said he will be “fighting for as much money as I can get” for defence when he meets Chancellor Jeremy Hunt on Thursday ahead of the November 17 autumn statement.
Asked about reports that he had threatened to resign if he did not get a commitment to raise defence spending to 3% of GDP by 2030, Mr Wallace said: “I haven’t said I would resign on 2.5, 3.5, 4%. Obviously the media might like that.”
Pressed by Labour MP Derek Twigg if the Ministry of Defence had briefed journalists that he would quit if he was not satisfied with his settlement, he replied: “I don’t run my department that way.”
Earlier in the hearing, Mr Wallace described the target of raising defence spending to 3% of GDP – compared to the Nato minimum of 2.5% – by the end of the decade as an “aspiration”.
He said that at a time of rising threat levels, it was important the country was prepared to commit greater resources to defence.
“Three percent as an aspiration or a planned marker, wherever we get to subject to our budget discussions, is a perfectly reasonable aspiration in the dangerous world that is emerging,” he said.
“I have always said as threat changes so should our commitment and our planning and our funding. Defence is moving back up the priority list back towards Cold War levels of where it should be.”
Mr Wallace said that his aim in his talks with the Chancellor would be to ensure that the defence budget was protected from the effects of inflation and fluctuations in the foreign exchange rate for the next two years.
“I will be fighting for as much money as I can get. I will fight every bit of the way to see what I can get,” he said. “I am keen that we get a budget insulated from the inflationary effects.”