World
Chancellor Weighs UK Membership in Canada-Led Defence Investment Bank
By Today News Hours Editorial Desk
The UK government is exploring whether to join a multilateral investment bank designed to help fund higher defence spending, according to officials familiar with the talks. Chancellor John Healey is understood to be considering an application to join the Defence, Security and Resilience Bank (DSRB), an initiative spearheaded by Canada, after his predecessor Rachel Reeves had previously turned down the idea.
Supporters of the bank argue it would allow member governments to borrow money more cheaply in order to expand military budgets. Treasury officials have said no final decision has yet been made. A government spokesperson said the UK remains "fully committed to working alongside our international partners to scale defence industrial capacity," adding that London is coordinating with Canada to ensure the DSRB works alongside the separate Multilateral Defence Mechanism.
The discussions come amid a busy period of diplomatic defence engagements. Prime Minister Andy Burnham had been scheduled to meet Canadian Prime Minister Mark Carney in the UK on Wednesday, but the meeting was cancelled following the death of Burnham's father. Separately, Nato Secretary General Mark Rutte is visiting the UK for his first meeting with the prime minister and is due to deliver a speech in Oxfordshire, where he plans to describe the UK as "serious about security" and commend its support for Ukraine. Rutte is also expected to say Nato will "not be intimidated by Russia's campaign of hostile actions," adding that Moscow's efforts to deter Western support for Kyiv would instead prompt allies to do more.
The visit follows renewed tension along Nato's eastern flank. Alliance forces recently shot down a drone over Lithuania, and Denmark this week accused a Russian warship of firing two emergency flares at a Danish helicopter that was tracking the vessel in the Baltic Sea.
The DSRB is designed to offer lower-cost loans for defence-related projects and already has backing from Albania, Belgium, Bulgaria, Greece, Latvia, Luxembourg, Romania, Turkey and Ukraine. For the UK and other G7 nations, joining would require an upfront investment of roughly £870m spread across three years.
Funding Britain's expanding defence commitments remains a major challenge for Healey as he prepares for the Budget in October and next year's spending review. The government has yet to commit to raising defence spending to 3% of national income by 2030, reiterating only its longer-term target of 3.5% by 2035.
While serving as defence secretary, Healey had privately pushed for UK membership of the DSRB as a way to secure additional funding, but he resigned in June, accusing the Treasury of failing to provide adequate resources for national defence. In his resignation letter, he pointed to "credible ways" of funding increased defence spending, including working through multinational structures such as the bank.