Britain can lead a new era of defence finance
4 min read
Last week marked 76 years since a Labour government helped found NATO. Now this Labour government must rise to the global defence challenge once again.
The global economic and security order is being rewritten. But not on our terms.
As the Prime Minister outlined last weekend, we’re in a new world governed less by established rules, and more by deals than alliances. Trade headwinds and defence challenges pose the obstacles of today, while the issues of tomorrow remain uncertain.
One such challenge is the scale that Russia’s defence industry is ramping up.
It is now expected to build 4,500 tanks and armoured vehicles this year, and 250,000 artillery shells per month. That’s enough to build a stockpile three times larger than the US and Europe combined.
This is not a temporary wartime surge – it’s an indication of a long-term shift. European and allied democracies must respond and match military strategy with financial and industrial capability.
That’s why now is the right time for the UK to be involved in creating the Defence, Security and Resilience (DSR) bank. This is a World Bank-style financial vehicle focused on defence that is ready to launch. Owned by nation states, it would mobilise capital into allied defence production and supply chain resilience.
There’s a fully developed plan behind this, shaped by experts from across the UK and Europe, led by an outstanding ex-British Army Officer, Rob Murray.
The DSR bank would use limited public capital to crowd in private investment, giving industry predictability on scaling, while relieving fiscal pressure on national budgets. It isn’t about replacing NATO or duplicating the European Investment Bank. It fills the gap between strategy and delivery — and does so with speed, scale and sovereign control.
Today (Friday, 11 April), European Finance Ministers meet in Poland. The continental backdrop is defined by constrained public budgets, central banks focusing on tackling inflation and tedious procurement timelines which are holding up vital investment in defence.
The missing ingredient is a financial catalyst to enable rapid industrial investment at scale, particularly in areas like munitions, energetics, radar systems and logistics platforms.
Few places are better positioned to help realise this ambition than Britain. We have the benefit of proximity to Europe and our special relationship with the US. But also, one of the world’s leading financial ecosystems in the City of London, with the institutional reach, regulatory expertise and global networks to help build and support a supranational bank of this kind.
Britain’s defence industrial base outside of London can grow with the right investment flows, bolstering our national economy and sovereign capabilities in the process. Regional industrial bases such as precision manufacturing or body armour production in the Midlands, through to aerospace in Lancashire, can catapult resilience into growth.
Domestic strengths aside, the Prime Minister’s diplomacy has re-established the UK as a trusted, constructive leader in European and Transatlantic security.
The DSR Bank can be a key component of a UK-EU Defence and Security Pact. As our government deepens cooperation with European allies — through NATO, the Joint Expeditionary Force and bilateral frameworks — we must also develop financial instruments that underpin shared production and supply chain strategy.
We must be globally minded, too. Allies like Canada, Australia, New Zealand, Japan and South Korea with shared values and defence depth should be included. And Ukraine, which has borne the front-line burden of Europe’s freedom, must be invited.
Last Friday marked 76 years since a Labour government led by Clement Attlee stood shoulder to shoulder with allies to found NATO and secure peace through shared strength.
This Labour government has a unique chance to make new history, by becoming a founding partner of the DSR Bank – combining Britain’s industrial strength with defence needs, equipping finance to deliver resilience and growth.
Taking this opportunity means Britain will not only hold the pen on the new global order, but also sign its name into the history books.
Alex Baker and Luke Charters are the Labour MPs for Aldershot and York Outer respectively.
