In a bold move, the Liberal Democrats are urging the British government to introduce a ‘war bonds’ scheme that could raise up to £20 billion to strengthen the UK’s military capabilities. Under the party’s proposal, members of the public would be able to lend money to the government in the form of bonds, which would run for two to three years and offer the same interest rate as standard government bonds.
Liberal Democrat leader Sir Ed Davey argues that this initiative would “give ordinary people the opportunity to contribute to Britain’s security” at a time of growing global tensions. The call for increased defence spending has intensified in recent years, following Russia’s full-scale invasion of Ukraine in 2022 and the election of former US President Donald Trump, who frequently criticised NATO countries for failing to meet their spending commitments.
The current Labour government has pledged to raise overall defence spending from 2.3% to 2.5% of national income by 2027, at an estimated cost of an additional £6 billion per year. There are also plans to further increase levels to 3.5% by 2035, in line with a NATO pledge. However, reports suggest that making the UK’s armed forces “war ready” will require £28 billion more than has been allocated so far.
Explaining the rationale behind the Lib Dems’ proposal, Sir Ed Davey said: “Now is the moment to be clear-eyed about the threats facing Britain – Vladimir Putin is waging war in Europe while Donald Trump is tearing up the rules and alliances that keep us safe.” He argued that it is “much better to invest now in deterring a war than having to fight one.”
The party claims that the money raised from the war bonds would be ring-fenced for defence and that the investment would help deliver “growth, jobs and higher revenues” for the government, which would partially offset the cost of additional debt servicing. The scheme would also need to be accompanied by an overhaul of the Ministry of Defence’s procurement process, which has previously been criticised as wasteful.
Experts have noted that war bonds are a proven way of raising money for national defence, but they can also burden a government with long-term debt. While some members of the public may see it as their duty to support the country, others may treat the bonds like any other investment opportunity.
As the UK grapples with the evolving security landscape, the Lib Dems’ proposal for war bonds presents a novel approach to bolstering the nation’s defence capabilities. The government’s response to this initiative will be closely watched as it navigates the complex challenges facing the country’s armed forces.
