The UK is in discussions about joining the Canada-led Defence, Security and Resilience Bank (DSRB), which would aim to offer cheaper loans for defence projects. Chancellor John Healey is considering a bid; membership could cost the UK about £870m over three years. The move comes amid budget pressures and recent security incidents on NATO’s eastern flank. The government says no decision has been made and stresses cooperation with international partners.
UK Weighs Joining Canada-Led Defence Bank to Help Fund Military Spending
A British soldier taking part in a Nato exercise in Finland [PA Media]
The UK government is in talks about joining a Canada-led multilateral investment vehicle intended to lower borrowing costs for defence projects and help governments expand military spending.
Chancellor John Healey is reported to be considering a bid to join the Defence, Security and Resilience Bank (DSRB), a proposal that was previously rejected by his predecessor, Rachel Reeves. Treasury officials have emphasised that no final decision has been taken.
What the DSRB Would Do
Supporters say the DSRB would allow participating states to borrow at lower interest rates for defence industrial projects, effectively leveraging multilateral capital to scale production and procurement. The proposed bank has secured backing from a group of partner countries including Albania, Bulgaria, Belgium, Greece, Latvia, Luxembourg, Romania, Turkey and Ukraine.
Membership for the UK and other G7 participants is expected to require an initial capital commitment of roughly £870m, spread over three years.
Political Context
The proposal comes as the government balances rising defence commitments with broader fiscal pressures ahead of the Autumn Budget and next year’s spending review. The government has so far stopped short of a firm pledge to reach 3% of national income on defence by 2030, continuing instead to cite a longer-term objective of 3.5% by 2035.
As defence secretary, John Healey is reported to have privately supported the idea of the UK joining the DSRB as a potential route to unlock extra funding. He later resigned from the defence brief in June, criticising the Treasury’s reluctance to allocate further resources; in his resignation letter he argued there were "credible ways" to fund extra defence spending, including through multinational cooperation.
International Visits And Security Concerns
A planned bilateral meeting between the UK prime minister and Canada’s prime minister was cancelled following a bereavement in the prime minister’s family. Separately, Dutch Prime Minister Mark Rutte is travelling to the UK and is due to give a speech in Oxfordshire in which he is expected to describe the UK as "serious about security" and to praise its support for Ukraine. Rutte is also expected to stress that NATO will not be intimidated by hostile actions from Russia.
The discussions on DSRB membership coincide with heightened tensions on NATO's eastern flank. NATO forces recently shot down a drone over Lithuania, and Denmark has accused a Russian warship of firing two emergency flares at a Danish helicopter tracking the vessel in the Baltic Sea.
Government Position
A government spokesperson said: "We are fully committed to working alongside our international partners to scale defence industrial capacity. We are working closely with our Canadian allies to ensure the Multilateral Defence Mechanism and Defence, Security and Resilience Bank are complementary."
BBC reporting suggests some senior figures favoured the UK joining the global defence bank, while defence officials continue to finalise national plans ahead of upcoming fiscal decisions.
Help us improve.
