UK chancellor touts defense spending push, previews US trade talks

The UK strengthens its defensive spending to play its role to support European security and work with the United States to negotiate a new trade deal between the old allies.

The UK Surgery Chancellor Rachel Reeves told Fox Business that the British government’s plan to increase defense spending comes as part of an attempt to enhance the economy and give the industrial character in the country that left behind.

“The strong defense and the strong economy are walking side by side, and I believe it strongly, and this is the industrial policy that we follow as a government,” Reeves said. “In the United Kingdom, we put the largest continuous increase in defense spending since the end of the Cold War at the present time.”

The UK government plan will witness an additional 2.2 billion pounds that are spent on defense in 2025-2026, with defensive spending increased as a percentage of GDP (GDP) to 2.5 % by 2025. This number will rise to 3 % in the next parliament, according to the government plan. In 2024, the UK spent an estimated 2.33 % of GDP on defense, according to NATO data.

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The UK Treasury Adviser Rachel Reeves Fox Business has seen an opportunity for a commercial deal between Britain and the United States (Shannon Finney / Getty Images for Semafor / Getty Images)

Reeves added that in an attempt to obtain more value for defensive spending in the United Kingdom, the government “uses a percentage of our defense budget to invest in new and innovative solutions, especially the technological list to better equip our armed forces.” She added that the United Kingdom encourages other European countries to follow its example by intensifying their defensive spending.

“It is extremely necessary for countries throughout Europe to increase their defensive spending and have done more to preserve the faith of Europe in the face of the growing aggression from Russia, and this is what many countries do all over Europe now,” Reeves said. “Britain ascends to this challenge, we are not negative in the face of the change we face. We are rising, more on defense, and we use this money to stimulate and promote parts of Britain that has left behind for a long time.”

Last year, NATO data showed that 23 of 32 member countries, including the latest members of the coalition, Finland and Sweden, are committed to the commitment of defense spending by 2 %. This is the largest number of NATO members who meet or exceed that threshold since its establishment in 2014. NATO will issue new data on the issue before the annual summit, which is scheduled in late June.

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The British aircraft carrier HMS Queen Elizabeth arrives at New York City to visit the 2018 port. (Christopher Forllong / Getty Emoz / Getty Pictures)

Reeves meets with various Trump administration officials this week, including Treasury Secretary Scott Besent, in an attempt to negotiate a new trade agreement between the two countries after President Donald Trump imposed customs duties on commercial partners, including the United Kingdom

The United States and the United Kingdom started discussions on a trade agreement in May 2020 – months after Britain left the European Union – during the first period of Trump, although the deal was not achieved at that time or during the administration of former President Joe Biden.

“The commercial deal is late,” Reeves said. “There is no closer partnership than a partnership between the United Kingdom and the United States, but we fully realize and understand the concerns that the United States binds with countries that manage significant trade surpluses with the United States in the United Kingdom is not one of those countries.”

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She pointed out that a large number of American and British citizens are working for companies whose headquarters is located in the opposite country, which leads to narrow economic relations that the advisor believes will help in strengthening the commercial deal.

“A million Britons work for American companies and they are very proud to do so, and a million Americans are working in British companies, and therefore our economies are closely intertwined, and this is why I think there is a deal that must be done to reduce commercial barriers between the roads between our countries in a good way for jobs, good for industry, and ultimately good for consumers,” Reeves said.

She said: “We are still making progress in this field. We will not push into a deal. Of course, like the UK government, we will only sign a deal if it is in the interest of our national country to do so.” “But I think a deal is present.”

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The chancellor added that, regardless of the treatment of customs tariffs and other commercial barriers, it sees an opportunity for a closer technological partnership between the two countries.

“There is already a very close defensive and security partnership between the United Kingdom and the United States – to take this to the next stage,” Reeves said. “The scientific institution in both countries is very huge, so we look at how to create a technological partnership on the same basis that we have a security and defense partnership.”