The UK is reinforcing its commitment to Ukraine’s defence with a £2.26 billion loan, set to be repaid using profits from sanctioned Russian sovereign assets. The agreement will be formally
signed today (Saturday, 1 March) by Chancellor Rachel Reeves and Ukraine’s Finance Minister Sergii Marchenko.
This loan is part of the G7’s Extraordinary Revenue Acceleration (ERA) Loans to Ukraine initiative, through which G7 nations will collectively provide $50 billion in financial support. The funding is specifically earmarked for military procurement, strengthening Ukraine’s armed forces at a crucial stage in the war. The first tranche is expected to be delivered next week.
A commitment to security and stability
Chancellor Reeves emphasized the importance of Ukraine’s security to the UK, 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”.
Holding Russia accountable
The loan will be repaid using extraordinary profits generated from sanctioned Russian sovereign assets held within the EU. This move aligns with international law, reinforcing the principle that Russia must bear financial responsibility for the destruction it has caused in Ukraine.
The financial package will be disbursed in three annual instalments of £752 million. It is part of a broader UK strategy to fortify national security, reflecting the government's Plan for Change, which prioritizes defence investment to protect citizens and create a stable economic environment.
With the UK aiming to increase defence spending to 3% of GDP in the future, this represents the most significant and sustained boost in military investment since the Cold War—ensuring the UK and its allies remain secure for generations to come.