Cracking the Code: Reeves Dishes on NATO, Trade, and Defense
Britain's finance chief promotes defense expenditure boost, discusses US commercial negotiations
Rachel Reeves, the UK's Chancellor of the Exchequer, is on a mission to strengthen ties with the US, particularly in the realms of defense and trade. In a chat with FOX Business, she spilled the beans about the British government's plans, sharing insights that range from defense spending boosts to a potential new trade deal.
First things first – the UK is stepping up its defense game, according to Reeves. The plan? A substantial increase in defense spending, with an estimated 2.2 billion pounds earmarked for 2025-2026. This push, Reeves explains, is part of a larger strategy to reindustrialize regions left behind and bolster the economy.
But it's not just about boosting defense spending; the UK is also focusing on making sure that every penny spent counts. By investing a portion of the defense budget in innovative, technology-based solutions, the government aims to equip the UK's armed forces more effectively. Additionally, Reeves encourages other European countries to increase their own defense spending, emphasizing the necessity of a united front in the face of rising aggression from Russia.
The UK has been proving its commitment to the 2% defense spending commitment, with estimates suggesting that it spent 2.33% of GDP on defense in 2024, according to NATO data. Yet, the UK is not resting on its laurels. Reeves hopes that defense spending will rise to 3% in the next Parliament, making the UK a key player in maintaining European security.
As for trade, Reeves sees an opportunity for a mutually beneficial agreement between the UK and the US. She believes that a deal is long overdue, given the close partnership between the two nations, and acknowledges US concerns about countries with persistent, large trade surpluses. Fortunately, the UK is not one of those countries, according to Reeves.
A significant number of American and British citizens work for companies headquartered in the opposite country, fostering tight economic ties that Reeves believes will aid in trade negotiations. She is optimistic about the potential for a deal, emphasizing that the UK will only sign if it's in the country's national interest.
Beyond tariffs and trade barriers, there's also potential for a closer technological partnership between the UK and the US. Reeves suggests taking the existing defense and security partnership to the next level, using the vast scientific enterprise in both countries to drive technological advancements.
With meetings with Trump administration officials scheduled this week, we can expect more developments in the UK-US trade relationship. Stay tuned!
Additional Insights:
- Recent reports suggest that Spain will meet the 2% defense spending target this year (2025) through an additional €10.4–10.5 billion investment, raising defense spending to €34 billion[1][2].
- Italy announced plans to reach the 2% target in 2025, according to Spain's announcement[1].
- Denmark has communicated plans to exceed 3% of GDP for defense spending, surpassing the NATO benchmark[3]. While these examples don't include a full list of NATO members currently meeting the 2% target, recent increases highlight shifting trends. As of April 2025, only 23 of 32 NATO countries had met the 2% commitment historically (per the 2024 Washington Summit context)[3], but specific 2025 compliance data remains partial. The upcoming NATO summit in June 2025 may clarify updated commitments, including potential raises beyond the 2% threshold[2]. For precise 2025 figures beyond Spain and Italy, additional country-specific reports would be necessary. Notably, Germany, France, and Poland have previously been reported as either nearing or meeting the target in recent years, but the provided results lack their 2025 status.
- Rachel Reeves, the UK's Chancellor of the Exchequer, encourages other European countries, such as Spain and Italy, to increase their defense spending towards the 2% target to build a united front against rising aggression from Russia.
- In addition to defense spending, Reeves also seeks an encouraging trade agreement between the UK and the US, hoping that 2025 will bring a mutually beneficial deal given the close partnership between the two nations.
- The UK, unlike some countries with persistent, large trade surpluses, is optimistic about trade negotiations, with a sizable number of American and British citizens working for companies headquartered in the opposite country.
- Beyond tariffs and trade barriers, Reeves also envisions a closer technological partnership between the UK and the US, with the potential for using both countries' vast scientific enterprise to drive technological advancements.
- In line with the UK's strategy to bolster the economy and reindustrialize regions left behind, a significant portion of the defense budget will be invested in technology-based solutions, aiming at equipping the UK's armed forces more effectively.
