EU and UK Plan to Establish European Defence Spending Bank

The European Union and the United Kingdom are discussing the creation of a pan-European defence spending mechanism as European countries try to strengthen their armed forces, the Financial Times reports.

‘It could be a fund or a bank. For example, there is the concept of a Rearmament Bank, which we are also considering,’ said Polish Finance Minister Andrzej Domanski. 

According to him, discussions with the UK have been ongoing for several months, as it is ‘difficult to imagine the defence of Europe without this country’.

In a commentary to Bloomberg, Andrzej Domanski said that Poland, as the EU presidency, is currently working on a ‘comprehensive concept’ for financing European defence, which it will present in the coming weeks. He added that Europe should have one common institution to financially support its rearmament efforts.

UK Chancellor of the Exchequer Rachel Reeves will hold talks with other European finance ministers at the G20 meeting in Cape Town this week. The Treasury said Reeves would ‘raise the issue of defence funding with her European counterparts’ but clarified that the talks were at an early stage. 

Increasing defence spending has become a priority across the EU after US President Donald Trump called on NATO allies to increase spending to 5% of GDP. After Russia's full-scale military invasion of Ukraine, Poland increased its military spending to more than 4% of GDP, the highest among Washington's allies in Europe.