The UK government has announced a £2.26 billion loan to bolster Ukraine’s military capabilities, with Chancellor Rachel Reeves and Ukrainian Finance Minister Sergii Marchenko signing the agreement today (1 March 2025).
The loan will be repaid using profits generated from sanctioned Russian sovereign assets held in the EU.
The funding is part of the G7 Extraordinary Revenue Acceleration (ERA) Loans to Ukraine scheme, through which G7 nations will collectively provide $50 billion to support Kyiv.
The first tranche of UK funding is expected to be disbursed next week, with the loan delivered in three equal annual payments of £752 million.
Chancellor Reeves underscored the strategic importance of supporting Ukraine, stating:
“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 agreement follows the UK’s commitment to provide £3 billion per year in military aid to Ukraine. Additionally, the UK government has pledged to increase defence spending to 2.5% of GDP by 2027, with an ambition to reach 3% in the next Parliament as economic conditions allow.
According to the Treasury, the funding will be fully earmarked for military procurement to reinforce Ukraine’s defences against Russian aggression. Reeves stressed that Russia has an obligation under international law to pay for the damage it has caused to Ukraine, and that using profits from frozen Russian assets is an important step in ensuring this happens.
The UK government describes the move as part of the largest sustained increase in defence spending since the Cold War, aimed at safeguarding collective security, supporting technological advancements, and strengthening industrial defence capabilities.
This latest announcement comes as Prime Minister Keir Starmer hosts a major summit on Ukraine in London, meeting with leaders from across Europe and NATO to discuss long-term security guarantees for Ukraine and increased military assistance.
Meanwhile… US Defence Secretary Pete Hegseth has ordered the United States Cyber Command to cease all activities aimed against Russia. The US is moving closer and closer to Putin.
Its going to be interesting to see how things develop. Trump is like a school yard bully and seems completely blind to the fact that putin has broken his promise /treaty in regards to Ukraine twice now.
Luckily its congress that decides what money is assigned, although it is the president that decides how it is used, so money could be assigned to support ukraine but used in a way that does the reverse.
It currently feel like Trump has been fully brought by russia, but i am still holding out hope that there is some form of master plan here that we are not seeing and ukraine will be supported.
p.s. don’t forget that May ordered the secruity service not to investiage russia interference in the brexit electrion, so not just policticans the other side of the pound having vested interests in keeping russian activities hidden.
Hope this is spent on procuring UK built equipment to boost production and lower unit costs for UK procurement and that none is used for US weapon systems.
Sunday Times seems to suggest that Rachel Reeves has changed remit of the £27.8bn National Wealth Fund so that it can be spent on defence. Maybe they’d like to start by plugging the existing black hole.
Will be interesting to see what it means in the long run.
Yes, saw that. Manufacturing facilities, shipbuilding halls, forces accommodation?
£2.26bn to kill people with, but nothing to keep pensiosners warm
labour all over !