Labour MPs: Britain must help establish a World Bank for defence
Closer UK–European ties on defence are a necessity. Here’s why Britain should help establish an international defence bank, write MPs Alex Bailey, Calvin Bailey and Luke Charters
Four years on from the Russian invasion of Ukraine, the illusions that once underpinned Europe’s security have been shattered.
The invasion was an assault on Ukrainian sovereignty and a stress test for the entire Euro-Atlantic system, exposing fragile supply chains, weakened industrial capacity, and a failing defence financing model. It forced an uncomfortable truth: the assumptions that kept Britain and our allies safe for generations are now breaking down.
The Prime Minister is right to stress the urgency of closer defence ties with Europe.
Geography alone makes this unavoidable. Brexit or not, Britain is a European power. Conflict on our continent means our security is inseparable from that of France, Germany, Poland and the Baltics. Closer cooperation is a strategic necessity.
But cooperation cannot stop at warm words and summit communiqués. If we’re serious about strengthening Europe’s collective defence, we need to rewire how it’s financed. That is where a Defence, Security and Resilience (DSR) Bank comes in.
This government deserves huge credit for delivering the largest sustained uplift in defence spending since the Cold War. Yet defence inflation has devoured those increases. Since 2022, the cost of munitions has soared. Standard 155mm artillery shells have multiplied in price. Anti-tank systems and armoured vehicles now cost far more than they did before Russian tanks rolled over the Ukrainian border.
Across the allied world, demand now far outstrips supply, with rising threats, rising prices and tight production. Bigger cheques won’t break this doom-loop or help us reach the strategic position we want.
Britain can shape global defence capital
The real constraint is capital. Defence manufacturers have full order books but lack affordable, long-term finance to expand capacity and invest in new technologies. Banks’ appetites are improving, but hesitation remains, as regulations and risk models still treat defence as politically sensitive and financially uncertain.
The result is a stop-start industrial base lurching from one short-term contract to another.
A multilateral DSR Bank, co-founded with like-minded European and transatlantic allies, tackles that problem. Imagine a World Bank for defence, raising capital on global markets at top tier credit ratings, guaranteeing loans, crowding in private finance and providing multi-year, low-cost funding for production lines, supply chains and advanced research.
As our cooperation with Paris and Berlin deepens, Britain has an opportunity to shape a new European defence framework. A joint financing institution could link industrial bases, support shared procurement and bolster Europe’s rearmament. It would also allow the UK to draw on its financial expertise and NATO ties and serve as a transatlantic bridge to Canadian Prime Minister Mark Carney, who has shown support for the DSR Bank’s potential.
By stepping forward now rather than later, we can shape the system instead of signing up to a fixed one in the future.
The domestic dividend is significant. Expanding defence and resilience manufacturing brings skilled jobs to neglected communities, apprenticeships for young engineers and roots supply chains in British towns. It recognises highly trained workers as long-term strategic assets for the nation rather than stuck in a perilous cycle of short-term contracts.
Anniversaries like four years of war in Ukraine call for reflection and action. Russia has rebuilt its financial system for long-term confrontation, and Europe risks falling behind without new models. Stronger defence cooperation and institutions are needed to turn political resolve into real industrial capacity.
A multilateral defence bank like a DSR bank makes Britain’s renewed European engagement substantive, not symbolic, proving that even in a volatile world we can build something durable and cooperative.
This moment demands true resolve. Purposeful, shared financing can turn commitment into capability, strengthening our security and ensuring Britain helps shape Europe’s strategic direction.
Alex Baker is the MP for Aldershot and Farnborough, Calvin Bailey MBE is the MP for Leyton and Wanstead and Luke Charters is the MP for York Outer