Despite the UK’s ramped-up efforts to bolster its military capabilities, the National Wealth Fund (NWF) will not count defense among its core investment priorities. Chancellor Rachel Reeves reaffirmed the government’s commitment to strengthening security through strategic investments. Still, they stopped short of directly allocating NWF resources to the defense sector.
With a £28 billion budget by the end of the current parliamentary term, the fund will focus on clean energy, advanced manufacturing, digital technologies, and transport—critical to the UK’s economic and industrial future. However, defence-specific investments were notably absent from the Treasury’s official strategy despite growing geopolitical tensions and the UK’s push to boost military spending.
Speaking on Wednesday, Reeves highlighted the importance of “dual-use technologies”—innovations with both civilian and military applications—alongside efforts to fortify supply chain resilience for national security. While this suggests an indirect nod to defense-related advancements, it stops short of explicit funding for military projects.
This decision lands against a backdrop of increasing pressure from the US. With President Donald Trump urging European nations to take greater responsibility for their defense spending ahead of an upcoming NATO summit, the UK is already increasing its military budget. Prime Minister Sir Keir Starmer has committed to raising defense spending from 2.3% to 2.5% of GDP, with ambitions to push it even further to 3%—funding this increase, partly through cuts to the foreign aid budget.
Reeves said the NWF could do more to “boost security and defense.” She added: “Obviously, it is important that we leverage in private sector money as well as public spending, but if we’re going to be spending billions extra every year on defense, I want to see that create good jobs, paying decent wages in the UK.”
Asked about the role of defense, the Treasury said that the “NWF can invest directly in defense projects.” The finance ministry’s strategy said: “The NWF should consider the role it can play in supporting the delivery of the wider industrial strategy, including in defense, life sciences, and creative industries; and the infrastructure strategy, including in the water and waste sectors.”
Labour’s original manifesto promised the creation of a new, independent wealth fund to channel investments into high-growth industries such as green steel and gigafactories, backed by £7.3 billion in fresh funding. However, in a significant shift last October, Reeves abandoned this approach. Instead, the government opted to rebrand the UK Infrastructure Bank as the National Wealth Fund, topping up its capital with an additional £5.8 billion—£1.5 billion less than initially planned.
Speaking on Wednesday, Reeves said: “I am determined to go further and faster to get our economy growing. By directing tens of billions of pounds into the UK’s industrial strengths, we’ll deliver the high-skilled, high-paid jobs of the future in every corner of the country.”
While the NWF’s blueprint prioritizes industrial and technological progress, the absence of direct defense-sector investments signals a careful balancing act: fostering innovation and economic growth while navigating the UK’s evolving security landscape.
Comments