Britain will not join Canada-led defence bank

{"text":[[{"start":10.6,"text":"Britain has decided not to join a global defence bank spearheaded by Canada, as chancellor John Healey prepares to throw his weight behind a separate UK-led initiative to help fill a multibillion hole in the UK defence budget. "}],[{"start":23.18,"text":"Andy Burnham, UK prime minister, discussed Britain joining the Ottawa initiative with Mark Carney, his Canadian counterpart, last month after officials began exploring the proposal, as first reported by the FT. "}],[{"start":36.24,"text":"But on Sunday it was announced that the plan would not go ahead, a move which will be seen in some quarters as a snub to Carney and his attempt to forge closer ties among the world’s “middle powers”. "}],[{"start":45.96,"text":"British officials insisted the “historic relationship” with Canada remained strong and the decision not to press ahead with a merger of the two initiatives was a mutual one. "}],[{"start":54.67,"text":"London and Ottawa could not agree on the way a merger of the two initiatives would work, UK officials briefed on the talks said. "},{"start":61.349000000000004,"text":"Britain also resisted the idea of the so-called Defence, Security and Resilience Bank having dual headquarters in Canada and Europe. "}],[{"start":68.9,"text":"Instead, Healey is expected to use his Budget on Wednesday to announce support for the separate Multilateral Defence Mechanism, a financing initiative originally driven by former UK chancellor Rachel Reeves. "}],[{"start":80.28,"text":"The UK has committed an initial £400mn to the MDM. "},{"start":84.659,"text":"The Netherlands, Poland and Finland have also signed up to the initiative. "},{"start":88.56400000000001,"text":"The Europeans and Canadians had looked at the idea of linking the two schemes. "}],[{"start":93.57,"text":"The MDM is intended to bolster procurement and stockpiling. "},{"start":97.387,"text":"Reeves insisted it would allow Britain to achieve “better value for money for taxpayers” while “crucially enabling us to borrow at a low rate to fund defence”. "}],[{"start":null,"text":"

"}],[{"start":106.05,"text":"Increasing defence spending is a key priority for Healey both in the short term and over the next decade. "}],[{"start":112.14999999999999,"text":"The chancellor has said he will fully fund the UK’s defence investment programme, which was left with a £4.7bn hole earlier in the year after Reeves failed to provide upfront financing for the equipment plan. "}],[{"start":124.05,"text":"Healey was defence secretary at the time and quit in June following a row with Reeves, including over her refusal to commit funds to increase UK defence spending to 3 per cent of GDP by 2030, something which Healey said was essential. "}],[{"start":137.66,"text":"The chancellor has indicated that the extra funding will not be allocated until a spending review next year but is expected to give strong indications in his Budget that he will find the money needed to help keep Britain safe. "}],[{"start":148.84,"text":"The Canadian-led DSRB, a lending institution modelled on the World Bank, has promised to provide “long-term, low-cost financing” for defence initiatives. "},{"start":157.957,"text":"The bank aims to facilitate cash for Canada and European countries as they seek to fulfil their pledge to spend an estimated €850bn extra a year on defence across Nato. "}],[{"start":168.19,"text":"Officials briefed on the talks said there was resistance from European members about the idea of a joint HQ for the proposed merged MDM/DSRB, with the majority of members being European. "}],[{"start":180.02,"text":"The two schemes were also unable to agree on an approach to procurement. "},{"start":184.11200000000002,"text":"The MDM countries wanted to focus on joint procurement, which was not a big part of the DSRB. "},{"start":189.554,"text":"There were also disagreements over rules to determine which new members could join in future. "}],[{"start":194.45000000000002,"text":"A British government insider said: “There’s a lot of good co-operation that can be done — Canada just has different priorities to us. "},{"start":201.467,"text":"They are focused on single sovereign lending to smaller countries and want to protect an HQ in Ottawa — while MDM countries want joint procurement to be the main focus of an international organisation with a AAA credit rating to support Nato targets. ”"}],[{"start":214.77,"text":"A European defence figure was critical of the UK government’s decision to retreat from the DSRB, however: “The UK has chosen a model that makes defence financing conditional on joint procurement, striking at the heart of national sovereignty. ”"}],[{"start":228.4,"text":"A joint statement from the UK and Canadian finance ministries said: “We have agreed to develop a framework of co-operation that works in the interest of both institutions, having mutually concluded that it is best to develop two distinct but complementary institutions that work in partnership. ”"}],[{"start":243.38,"text":"The UK government’s ambitions to boost defence could be helped by Healey’s decision to inject more capital into its National Wealth Fund and British Business Bank — two publicly owned investment bodies. "}],[{"start":253.87,"text":"The FT revealed on Friday that the Treasury is planning to grant an extra £20bn to the two institutions over a half-decade period. "},{"start":261.599,"text":"The government told the NWF last year to boost its involvement in defence technologies as part of its mandate. "}],[{"start":267.27,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1792996205_7110.mp3"}