In an interview with The Daily Telegraph, Hammond, a Conservative, said any further efforts to trim the budget should take aim at welfare benefits. He suggested a coalition of Conservatives in the Cabinet are prepared to oppose their coalition partners, the Liberal Democrats, who say welfare should not be cut any further.
Hammond spoke to the newspaper in northern Norway, where he was with British soldiers training in arctic operations.
"I shall go into the spending review fighting the case for the defense budget on the basis that we have made very large cuts to defense, we've done that with the collaboration and cooperation of the military," he said.
"Any further reduction in the defense budget would fall on the level of activity that we were able to carry out -- the idea that expensively bought equipment may not be able to be used, expensively employed troops may not be able to be exercised and trained as regularly as they need to be."