Chancellor John Healey is currently in talks with the Canadian government regarding the UK's potential membership in a new global defence bank. The proposed Canada-led Defence, Security and Resilience Bank (DSRB) aims to assist allies in rearming to address increasing security threats.
The UK is understood to have received a formal invitation to become a founding member of the DSRB. Proponents of the bank suggest it could enable the UK to finance defence projects at a lower cost.
This development follows former Chancellor Rachel Reeves' rejection of the move weeks prior. Reeves had expressed concerns that the DSRB would not address the UK's defence procurement issues and was more focused on lending to smaller defence firms in nations with lower credit ratings. She instead announced in July that the UK would join the Netherlands, Finland, and Poland to launch the Multilateral Defence Mechanism (MDM), committing an initial £600m.
Healey, who was previously defence secretary, is understood to have been a strong advocate for maintaining UK observers at Canadian prime minister Mark Carney's defence bank talks. He met Canadian finance minister François-Philippe Champagne twice at a G20 summit two weeks ago and they are scheduled to meet again in the UK this week, with discussions on the defence bank expected.
The DSRB is seeking to raise approximately €100bn to provide low-cost loans to governments and contractors for defence projects. The UK's initial capital contribution to the DSRB would be between £1bn and £2bn over three years.