Treasury resisted defence bank plan backed by UK industry, allies say

Britain’s Treasury has resisted a plan that allies of former defence secretary John Healey say could help turn higher military spending into industrial capacity. The dispute has become a test of whether finance ministries still see defence as a budget line, or whether security officials now treat it as a race to build the factories, supply chains and financing tools that rearmament demands.

The Defence, Security and Resilience Bank, or DSRB, is being pitched as a multilateral, state-backed lender to help NATO and allied governments finance defence procurement and supply-chain resilience at lower borrowing costs. Reuters reported on 4 September 2025 that the Treasury said the plan was not backed by the UK government and that Britain had no plans to join, even as the bank invited 41 countries, including Germany, Japan and the United States, to a City of London meeting to discuss funding. The DSRB has been described as a planned £100 billion, $135.1 billion lender advised by senior retired military figures including Stuart Peach, the former British chief of the defence staff and former chairman of the NATO Military Committee.

Industry pressure intensified early in 2026. In February, more than 800 British defence companies urged Chancellor Rachel Reeves to join the DSRB, with Make UK Defence arguing that the bank could help convert higher spending into real industrial capacity and military capability. POLITICO said the government still had no current plans to join, while business leaders warned that delays to the Defence Investment Plan were undermining confidence. The DSRB was conceived by Rob Murray, the former head of NATO innovation, and is designed as an AAA-rated bank that could lend directly to governments and provide credit guarantees to commercial banks.

The political stakes rose further in April, when Britain was expected to send only a defence attaché, not a minister, to talks in Montreal. Canadian prime minister Mark Carney has championed the plan and lobbied Britain to join, while Labour MPs and defence-industry figures warned that London risked missing out again after staying outside the EU’s SAFE defence-loan programme. The debate has sharpened a broader argument inside government over how far public money should be used to crowd in private capital for rearmament.

That question became more urgent on 5 June, when The Telegraph reported that draft DSRB rules could keep British suppliers out of purchases financed by the lender if the UK stayed on the sidelines. The same report said Reeves had rejected an initial funding demand of €1 billion, or £870 million, as ministers tried to fill a reported £28 billion hole in the Ministry of Defence equipment plan. Reeves was said to have offered an extra £12 billion, while Healey was seeking at least £18 billion. Against a pledge to lift defence spending to 2.5% of GDP by 2027 and 3% in the next parliament, the fight over the DSRB has become a wider contest over who pays for Europe’s rearmament and who gets the industrial dividends.