Should the UK Pay £870m to Join a New Defence Bank?

Chancellor John Healey is thinking about whether Britain should join a new international bank that lends money for defence. BBC

The bank is called the Defence, Security and Resilience Bank, or DSRB. It would be owned by several countries together. Canada is leading work to set it up. Supporters said it would let governments borrow more cheaply to spend more on defence.

Treasury officials said no decision has been made. They said joining would cost the UK and other G7 countries — the seven big advanced economies — about £870 million, paid over three years.

Healey backed the idea when he was defence secretary. He privately pushed for Britain to join to raise money. Former Chancellor Rachel Reeves had said no to the idea.

In its formal reply, the government said it was “working closely with Canadian allies on ensuring the Multilateral Defence Mechanism and Defence Security Resilience Bank are complementary.” It said it was “fully committed to working alongside international partners to scale defence industrial capacity.”

Canadian Prime Minister Mark Carney has pushed the idea around the world, the BBC reported, and is said to want the UK to join. BBC The bank already has backing from Albania, Bulgaria, Belgium, Greece, Latvia, Luxembourg, Romania, Turkey and Ukraine.

Reuters spoke to eight people who know about the talks. Reuters Some asked whether the new bank could really lend more cheaply than big governments borrowing on their own.

The broader context here is a common argument in Whitehall about defence money. Think of it like neighbours taking out a joint loan to try to get a better rate. The defence chiefs want faster buying and more work for factories. The Chancellor must weigh the joining fee and possible future bills.

In my view, the careful words about the two plans keep both options open. They show goodwill to Canada without promising London will pay the money over three years. The open questions are how the bank would be run, how safe lenders would judge it to be, whether British firms could win work from it, and whether its loans would help the defence budget or just add another bill. Officials said none of this is settled.