John Healey, Britain’s new Chancellor, is expected to revive efforts to join an international defence funding initiative aimed at increasing the country’s military spending, after his predecessor Rachel Reeves declined to support the plan. Healey resigned last month as defence secretary, a move seen as a major factor leading to Sir Keir Starmer’s resignation as Labour leader.
The initiative under consideration is the Defence, Security and Resilience Bank (DSRB), a Canadian-led multinational institution designed to help member countries finance defence projects at lower costs. The bank pools financial resources from participating states to fund defence companies, enabling members to support military expenditures through debt arrangements that do not directly impact national balance sheets.
Discussions about the UK joining the DSRB reportedly took place within the transition team of newly appointed Prime Minister Andy Burnham prior to his assumption of office. Healey, who was Burnham’s surprise choice for Chancellor, had previously advocated for UK membership while serving as defence secretary. A source familiar with the matter indicated an expectation that the new government would move forward with the plan.
On Burnham’s first day as Prime Minister, he reaffirmed the commitment to raising defence spending to 3 percent of GDP by 2030, stressing that such increases would adhere to established fiscal rules, including avoiding financing day-to-day government expenditures through borrowing and ensuring overall debt reduction. However, without identifying innovative funding mechanisms, Healey may face similar budgetary challenges as Reeves did, particularly given his prior criticism of the Treasury’s reluctance to allocate sufficient funds for rearmament.
The UK’s previous hesitation to join the DSRB stemmed largely from opposition within the Treasury under Reeves, which was concerned about incurring additional borrowing outside direct Whitehall control. Reports indicate that membership would require an initial investment of approximately £870 million over three years—funds Reeves was unwilling to commit, having ruled out further borrowing for defence.
Healey’s resignation letter had referenced “credible ways” to raise additional funds, including multinational cooperation, widely interpreted as an endorsement of the DSRB. Treasury officials at the time maintained Healey never formally proposed UK membership.
A group of nine countries was recently announced as the inaugural members of the DSRB at a NATO summit in Ankara: Canada, Albania, Belgium, Greece, Latvia, Luxembourg, Romania, Turkey, and Ukraine. Canada remains the only G7 economy to have officially endorsed the bank, with Canadian Foreign Minister Anita Anand confirming the initiative remains open to new members.
Senior UK government officials stated that neither membership in the DSRB nor the issuance of war bonds is currently under active consideration. Representatives from Healey’s office and the new Defence Secretary Wes Streeting did not respond to requests for comment.