UK reinforces support for Ukraine with £2.26 billion loan to bolster Ukrainian defence capabilities
Chancellor Rachel Reeves and Ukraine’s Finance Minister Sergii Marchenko will today (Saturday 1 March) sign the UK-Ukraine Bilateral agreement.
- The £2.26 billion loan will bolster Ukrainian military capability, and will be paid back using profits generated on sanctioned Russian sovereign assets.
- Chancellor Rachel Reeves and Ukrainian Finance Minister Sergii Marchenko will sign the formal loan agreement today (Saturday 1 March), with the first tranche of funding expected to reach Ukraine later next week.
- The loan demonstrates the UK’s commitment to Ukrainian defence. A strong Ukraine is vital to UK national security – the first duty of any government and central to the Plan for Change.
Chancellor Rachel Reeves and Ukraine’s Finance Minister Sergii Marchenko will today (Saturday 1 March) sign the UK-Ukraine Bilateral agreement.
This agreement will deliver £2.26 billion in funding to Ukraine, which will be paid back using the extraordinary profits generated on sanctioned Russian sovereign assets held in the EU.
This is the UK’s contribution to the G7 Extraordinary Revenue Acceleration (ERA) Loans to Ukraine scheme, through which G7 countries will collectively provide $50 billion to support Ukraine.
Chancellor of the Exchequer Rachel Reeves said:
A safe and secure Ukraine is a safe and secure United Kingdom. This funding will bolster Ukraine’s armed forces and will put Ukraine in the strongest possible position at a critical juncture in the war.
It comes as we have increased our defence spending to 2.5% of GDP, which will deliver the stability required to keep us safe and underpin economic growth.
The loan will be fully earmarked for military procurement to bolster Ukraine’s defences, with the first tranche of funding expected to be disbursed to Ukraine next week.
Russia’s obligation under international law to pay for the damage it has caused to Ukraine is clear and this G7 agreement, backed by the profits generated on sanctioned Russian sovereign assets, is an important step to ensuring this happens.
The funding will be delivered in three equal annual payments of £752m.
The announcement of the loan agreement is on top of the £3 billion a year commitment by the UK to provide military aid for Ukraine. The Prime Minister has been clear that a strong Ukraine is vital to UK national security.
This loan follows the announcement by the Prime Minister committing the Government to increase UK defence spending to 2.5% of GDP by 2027, with an ambition to spend 3% of GDP on defence in the next parliament as economic and fiscal conditions allow.
This represents the biggest sustained increase in defence spending since the Cold War, safeguarding our collective security and funding the capabilities, technology and industrial capacity needed to keep the UK and our allies safe for generations to come.
As set out in the Plan for Change, national security is the first duty of the government, and investment in defence will protect UK citizens from threats at home while also creating a secure and stable environment for economic growth.