UNITED KINGDOM — Andy Burnham, anticipated to be Britain's next prime minister, is considering issuing war bonds to fund the UK military as of June 2026. These war bonds would be gilts sold to the public, with the proceeds specifically directed toward the UK defense sector.

Chancellor of the Exchequer Rachel Reeves indicated that "most defense spending is capital investment." Reeves also stated that a multilateral defense mechanism with European allies "will enable us to stockpile things like munitions off government balance sheets."

Andy Haldane, a key adviser to Burnham and former chief economist of the Bank of England, has previously supported the concept of war bonds. Some proponents believe these bonds could raise £20 billion. Proposals raised by City economists suggest war bonds would be exempt from 40% inheritance tax.

In June 2026, Prime Minister Keir Starmer dismissed the proposal for war bonds. Starmer told the House of Commons that war bonds would be "just another form of borrowing." This discussion follows the resignations of John Healey from his role as defense secretary and junior minister Al Carns in June 2026. Both Healey and Carns argued that the government's planned increase in defense spending was insufficient. The UK government is considering methods to raise defense spending above £13.5 billion.

Burnham has pledged to adhere to Reeves' fiscal rules, which stipulate that day-to-day spending must be met by revenues by the third year of the forecast, and net debt should decrease as a share of the economy by 2029/30. A former Goldman Sachs economist is reticent about the idea of war bonds. The economist said Burnham would seek to use "flexibility" in the fiscal rules to increase spending on infrastructure projects.

The Liberal Democrats have advocated for war bonds on 25 separate occasions since the beginning of 2026. An economist floated the idea of war bonds in December 2025. UK residents deposit approximately £70 billion annually into Individual Savings Accounts (ISAs), with up to £20,000 of annual contributions being tax-free.

A long-delayed investment plan is set to be published ahead of the North Atlantic Treaty Organization summit in July 2026. UK green bonds, first launched five years ago, were extended to retail investors for the first time in March 2026.