Canada hopes the change of government in London will remove a major obstacle to UK membership of a proposed institution designed to mobilise as much as £100 billion for allied defence and security projects.

Canada is renewing its campaign to bring Britain into a proposed multinational defence bank, calculating that the arrival of a new government in London could unlock an agreement that proved elusive under former finance minister Rachel Reeves.

Ottawa regards British participation as potentially transformative for the Defence, Security and Resilience Bank, or DSRB. The institution is intended to raise as much as £100 billion—approximately $134 billion—in affordable, long-term financing for defence production, military infrastructure and strategically important supply chains.

Canadian officials are hopeful that Britain’s new administration will take a more favourable view of the project after Reeves resisted committing the country to the bank. Her position reflected concerns about cost, duplication and the existence of a separate British-backed financing initiative.

Before leaving office, Reeves had argued that the DSRB should be combined with Britain’s Multilateral Defence Mechanism rather than developed as an independent institution. London’s preferred mechanism, supported by the Netherlands, Finland and Poland, is focused largely on joint weapons procurement, equipment stockpiling and attracting private capital into defence projects.

Canada, by contrast, has promoted the DSRB as a full-scale international financial institution capable of borrowing from capital markets and lending to participating governments and defence companies at favourable rates.

The proposed bank would seek a triple-A credit rating, allowing it to raise money more cheaply than many individual countries or smaller businesses could do independently. It would also provide guarantees designed to encourage commercial banks to finance defence manufacturers that have traditionally struggled to secure loans.

That problem has become increasingly urgent as NATO governments attempt to replenish weapons inventories, expand ammunition production and modernise military infrastructure. Smaller suppliers often possess valuable technology or manufacturing expertise but lack the capital needed to increase production rapidly.

Canada argues that the DSRB could close that financing gap while reducing the burden on national budgets. Rather than requiring governments to fund every project directly, the bank would use contributions from member states to support a much larger pool of borrowed capital.

The initiative has become a central element of Prime Minister Mark Carney’s effort to increase Canada’s influence within the Western security architecture. Canada will host the bank’s principal headquarters, while Luxembourg has been selected as its European base.

Nine countries have committed to participating, including Canada, Albania, Belgium, Greece, Latvia, Luxembourg, Romania, Turkey and Ukraine. Turkey subsequently confirmed that it intended to join as a founding member. However, the absence of another major Group of Seven economy has raised questions about whether the institution can achieve the scale and credit strength envisioned by its supporters.

British membership could therefore provide both financial credibility and political momentum. London remains one of NATO’s largest defence spenders, possesses one of Europe’s most advanced military-industrial sectors and plays a central role in multinational weapons programmes.

A British commitment could also encourage other major economies to reconsider their position. Germany previously declined to support the Canadian plan, preferring European Union financing programmes, while several other countries have remained cautious about contributing start-up capital to another international institution.

The political change in London has created an opportunity for Ottawa to reopen the debate. Britain’s new government has already emphasised defence investment and international industrial partnerships, securing an early diplomatic success when Canada became the first observer nation in the Global Combat Air Programme.

That British-led project, developed with Italy and Japan, aims to produce a sixth-generation stealth fighter by 2035. Canada’s participation gives it access to discussions on capability development, industrial cooperation and long-term delivery planning, although Ottawa has not yet made a financial commitment.

The fighter agreement demonstrates the increasingly close defence relationship between the two countries. Canada is seeking to diversify military procurement beyond the United States, while Britain wants additional partners capable of supporting the enormous costs of advanced weapons development.

Ottawa now hopes that the same strategic logic will persuade London to join the DSRB.

Supporters of British membership argue that the Canadian and British financing plans do not necessarily have to compete. The Multilateral Defence Mechanism could concentrate on coordinating procurement and managing shared equipment inventories, while the DSRB could provide the larger pool of long-term capital required to finance production and infrastructure.

Some defence-finance specialists have suggested that the two initiatives could eventually operate together or be combined under a broader structure. Such an arrangement might preserve separate balance sheets while allowing the institutions to share governance, expertise and participating countries.

However, Britain’s new government must still decide whether joining would represent good value for taxpayers. Membership would require an initial capital contribution and could expose the country to financial obligations if borrowers failed to repay loans.

Ministers must also determine whether a Canada-headquartered institution would offer Britain sufficient influence over lending decisions, procurement priorities and corporate eligibility.

Those questions are likely to feature prominently in discussions between Ottawa and London. Canada will emphasise that the bank is intended not merely to increase defence expenditure, but to make that spending more efficient by pooling risk and giving governments access to lower-cost financing.

For Britain, participation could bring significant advantages. British defence companies could gain access to new sources of capital and contracts generated by projects in member countries. London could also help shape international lending standards for the defence industry and strengthen its position as a financial centre for security-related investment.

The wider geopolitical environment adds urgency to the negotiations. The war in Ukraine has exposed weaknesses in Western ammunition reserves and manufacturing capacity, while conflicts elsewhere have increased demand for air-defence systems, drones, missiles and surveillance technology.

At the same time, uncertainty over the future direction of the United States has encouraged Canada and European countries to develop defence structures that are less dependent on Washington.

The DSRB is part of that broader effort. Its success will depend on whether governments are willing to translate promises of greater strategic autonomy into shared financial commitments.

Canada has secured a group of smaller and medium-sized founding members. Bringing Britain into the institution would represent a far more consequential achievement, providing the bank with one of the military, industrial and financial powers it needs to become genuinely global.

Ottawa’s renewed lobbying campaign is therefore about more than securing another flag on the membership list. It is an attempt to prove that the proposed bank can become a central pillar of allied rearmament rather than one of several competing initiatives struggling for political support.