Our sights on 5% of GDP for defence spend, says Healey

The UK faces renewed pressure to  increase its commitment to defence, with talks last week that agreed new military capabilities for each Nato member and further discussions at the end of June month to thrash out spending.

The defence secretary told The Observer: “There were discussions at Nato [last] week about 5% on national defence and resilience and, of course, we are up for that discussion.

“President Trump and the US are right to push Nato allies to do more. We’ve long said European nations need to do more of the heavy lifting. And at the defence ministers’ meeting on Thursday you saw everyone stepping up… we’ll go as far as we need to ensure the British people are safe.”

It is the first time a minister has signalled such a shift in thinking. The government currently spends 2.3%, with Keir Starmer having fast-tracked plans in February to reach 2.5% in 2027, and only an “ambition” to hit 3% by 2034.

But the Prime Minister will meet US President Donald Trump at the Hague in less than three weeks, and Starmer will be pressed to make this fresh commitment along with other allies. The total is broken down to 3.5% to be spent on “hard” defence, and a further 1.5% on broader “resilience”, like infrastructure and cyber defence.

The UK was singled out by US Secretary of Defense Pete Hegseth as holding out on any higher commitment during talks on Thursday, despite there being “almost near consensus” among allies. Tomorrow, Starmer will host Nato’s secretary general Mark Rutte at Downing Street for discussions on the same topic.

Healey also gave the clearest indication yet that momentum is building for a “World Bank for Defence”. He said the Ministry of Defence was working on options that would combine the borrowing power of multiple nations to purchase weapons and other military equipment.

“With the Treasury, we are looking at the idea of whether we can join with countries and create a defence bank,” he said. “We are looking at some of the range of potential financial mechanisms that could be available.

“Instead of simply talking about what countries will do in the 2030s, everyone knows we need to increase what we spend on defence and that’s what we are doing now.”

It is the first time a minister has publicly backed the concept, which has been circulating for months, and which could help unlock billions of pounds without further stretching the public finances. It is thought the “Defence, Security and Resilience Bank” is the favoured option, involving various Nato allies including Canada. While it is particularly focused on Europe, the vehicle would not be an EU initiative, enabling countries from outside to participate while cutting out those seen as too close to Russia, such as Hungary.

The bank is championed by Rob Murray, a former British army officer and the head of innovation at Nato.

Another option might be the Rearmament Bank model mooted by General Sir Nick Carter, the former chief of the defence staff, along with Guy de Selliers, a founder of the European Bank for Reconstruction and Development, and Edward Lucas, the security expert. A bespoke option is also under consideration. 

The bank plan is being discussed across Whitehall - including at Number 10 -  and is expected to feature at the Hague summit. 

This article has been updated since publication

Photograph by Leon Neal/Getty Images