Healey reopens question of UK membership of Canada-led defence bank
The UK government is in discussions about joining a global investment bank aimed at raising more money for defence spending, with Chancellor John Healey considering a bid for the UK to join the Defence, Security and Resilience Bank (DSRB). BBC
The DSRB is a multilateral bank intended to provide cheaper loans to fund defence projects. Canada has been leading efforts to establish it. Supporters say it would enable governments to borrow at lower costs to increase military spending.
Treasury officials stressed that no decision has been made. Membership for the UK and other G7 countries would come with an upfront investment cost of around £870 million spread over three years.
The consideration marks a change of personnel and position at the Treasury. As defence secretary, Healey privately pushed for the UK to join the DSRB as a means of raising money. Former Chancellor Rachel Reeves had rejected the idea.
In its formal response, the government said it was “working closely with Canadian allies on ensuring the Multilateral Defence Mechanism and Defence Security Resilience Bank are complementary.” It added that it was “fully committed to working alongside international partners to scale defence industrial capacity.”
Canadian Prime Minister Mark Carney has been pushing the idea of a global defence bank on the global stage and is said to be keen for the UK to join the project. BBC The DSRB already has backing from Albania, Bulgaria, Belgium, Greece, Latvia, Luxembourg, Romania, Turkey and Ukraine. That list matters. It is weighted towards smaller NATO states and, crucially, Ukraine.
There is scepticism about the financing proposition. Reuters spoke to eight people with knowledge of the discussions. Some questioned whether the DSRB could offer cheaper financing than highly rated national governments.
Looking at what this means for Whitehall, the institutional tension is familiar to anyone who works the defence budget. The Defence Secretary wants throughput, faster procurement and a larger investable pipeline for industry. The Chancellor has to weigh subscription costs, contingent liabilities and whether multilateral borrowing genuinely lowers the cost of capital for a sovereign with deep gilt markets. Healey has now moved from one chair to the other, and his private advocacy at Defence will be tested against Treasury criteria he now owns.
In my view, the complementary language around the Multilateral Defence Mechanism and the DSRB should be read carefully. It keeps two tracks open. It signals goodwill to Ottawa without pre-committing London to paid-in capital on a three-year timetable. For expert readers, the questions to watch are governance, credit rating of the new bank, procurement eligibility for UK firms, and whether loans would score in a way that eases pressure on the defence budget or simply add another subscription line. None of those points has been settled, and officials are explicit that the bid remains under consideration rather than agreed.
