The UK government is in discussions about joining a global investment bank, aimed at raising more money for defence spending. Chancellor John Healey is considering a bid to join the Defence, Security and Resilience Bank (DSRB), not long after his predecessor Rachel Reeves rejected the idea. Canada has been leading efforts to establish the bank, which supporters say would enable governments to borrow at lower costs to increase military spending. Treasury officials stressed that no decision has been made.
A government spokesperson said it was “fully committed to working alongside our international partners to scale defence industrial capacity.” Before he cancelled commitments due to the death of his father, Prime Minister Andy Burnham had been due to meet Canada’s Prime Minister Mark Carney in the UK on Wednesday. Nato Secretary General Mark Rutte is also travelling to the UK for his first meeting with the prime minister. He is giving a speech in Oxfordshire, where he is expected to say the UK is “serious about security” and praise the country’s efforts supporting Ukraine. He will also say that Nato will “not be intimidated by Russia’s campaign of hostile actions.
“Russia wants to stop us helping Ukraine – but their actions will only lead us to do more for Ukraine.” It comes after Nato forces shot down a drone over Lithuania in the latest security scare on the alliance’s eastern flank, where tensions remain high amid Russia’s full-scale invasion of Ukraine. And on Tuesday Denmark also accused a Russian warship of firing two emergency flares at one of its helicopters while it was tracking the vessel in the Baltic Sea. The DSRB is a multilateral bank aimed at providing cheaper loans to fund defence projects and has backing from Albania, Bulgaria, Belgium, Greece, Latvia, Luxembourg, Romania, Turkey and Ukraine. Membership of the bank for the UK and other G7 countries would come with an upfront investment cost of around £870m spread over three years.
Paying for the UK’s growing defence commitments is one of Healey’s biggest headaches as he prepares for the Budget in October and next year’s spending review. The government has so far avoided committing to raising defence spending to 3% of national income by 2030, only repeating the longer term goal of 3.5% by 2035. As defence secretary, Healey privately pushed for the UK to join the DSRB as a means of raising money. He resigned in June, accusing the Treasury of being unwilling to provide the resources needed to defend the country.
In his resignation letter, he said there were “credible ways” to fund extra defence spending, including “working multinationally”. 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 on ensuring the Multilateral Defence Mechanism and Defence Security Resilience Bank are complementary.” Healey wanted UK to join global defence bank, BBC told Jarvis ‘working round clock’ to finalise defence plan
