The United Kingdom and Canada have agreed to develop a joint framework for cooperation between their two separate defence financing initiatives, rather than merging them into a single institution. The agreement was set out in a joint statement from HM Treasury and Canada's Department of Finance on Sunday 25 October 2026.

Under the plan, the two schemes will be designed to work in close partnership. They are intended to support each other on emerging industrial priorities, investment opportunities and strategic financing challenges, and together to strengthen the defence industrial base and collective defence readiness.

Two separate schemes

The two initiatives are the UK-backed Multilateral Defence Mechanism and the Canada-led Defence, Security and Resilience Bank. Reuters, citing a source familiar with the matter, reported that Britain will not join the Canada-led bank. According to that reporting, the two sides could not agree on issues including the bank's headquarters location, joint procurement, lending to members and the rules for future members joining.

The same reporting described the Multilateral Defence Mechanism as focused on accelerating defence investment and joint procurement, and on bringing together demand across NATO allies to reduce costs. The Defence, Security and Resilience Bank was described as complementing it by supporting investment in defence industries and supply chains, with a greater emphasis on lending to individual countries.

No timetable, no new funding

The joint statement itself does not set a timetable for the framework, nor does it announce new funding. Its significance lies in the decision to keep the two institutions distinct while aligning their work, at a time when allies are seeking faster and more efficient ways to finance defence production.

Sources: GOV.UK joint statement; Reuters reporting on the Canada-led bank.