What is Europe’s ‘bomb bank’ plan? Can it secure Ukraine's defences without US support?

The United Kingdom has proposed the establishment of a European rearmament bank to strengthen the continent’s defence capabilities and support Ukraine in its ongoing conflict with Russia.

The plan involves an initial investment of £10-20 billion from governments, leveraging up to £100-200 billion in private capital for military investments.

This initiative, reported by UK’s The Times, follows the model of the European Bank for Reconstruction and Development and aims to provide a large-scale financing mechanism without putting excessive strain on individual member states’ budgets.

The bank would allow participation from non-EU countries such as Britain, Norway, Japan, and the United States, while also giving neutral EU nations like Austria, Ireland, Malta, and Cyprus the option to remain uninvolved.

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Structurally, the model relies on a capital subscription system where a fraction of the total capital (about 10 per cent) would be paid upfront, with the rest callable, enabling the bank to borrow on capital markets with a strong credit rating, reported The Times.

Proponents argue that this financial structure would allow Europe to boost military spending without significantly affecting national borrowing capacities.

At a UK-instigated meeting of European finance ministers on the sidelines of the G20 summit in South Africa , British Chancellor Rachel Reeves instructed Treasury officials to develop concrete proposals for the bank, aiming to provide a sustainable funding mechanism for European defence investments.

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European support grows as US support pauses

The proposal has gained traction among key European leaders. Friedrich Merz , Germany’s likely next chancellor, has signalled strong interest in the initiative , alongside Poland’s foreign minister and French President Emmanuel Macron. Both Merz and Macron are particularly receptive to the idea, viewing it as a crucial step in strengthening European security.

Merz acknowledged that he had yet to make a “final” decision on the “bomb bank” plan but described Britain’s constructive engagement in European security as “extraordinarily encouraging.”

He also noted that Brexit had done little to diminish the UK’s role in shaping Europe’s defence policies, saying, “In this respect, it’s very obvious that it barely matters that Britain is no longer in the European Union.”

The initiative comes at a time when relations between Europe and the United States are under strain. The spectacle of US President Donald Trump and Vice President JD Vance publicly berating Ukrainian President Volodymyr Zelenskyy has alarmed European capitals, reinforcing concerns that Washington may be moving towards disengagement from the conflict.

Germany’s outgoing foreign minister, Annalena Baerbock, described the incident as marking the dawn of a “new age of villainy.” She warned that the US risked eroding its credibility if it continued to portray Ukraine as the aggressor while casting Russia as its victim.

“It would then be hard to find a country willing to rely on the word of the oldest democracy and the strongest military power in the world,” Baerbock had stated ahead of a London summit.

Merz, a longtime advocate of strong transatlantic ties, admitted that he found it “increasingly difficult” to see shared values with the US under its current leadership. He also cautioned against a worst-case scenario where Europe would be forced to defend itself without American support, saying in an interview with German daily Frankfurter Allgemeine Zeitung, “Can we do that today? The answer is no. Do we want to achieve it soon, and do we have to? Clearly, yes.”

What it means for NATO the future of European defence

These developments have reignited debates about European strategic autonomy, particularly regarding nuclear deterrence. Macron has reiterated his offer to extend France’s nuclear umbrella to cover European allies, arguing that reliance on the US nuclear deterrent is no longer viable.

“We have a shield, they don’t,” he stated in an interview with French newspapers. “And they can no longer depend on the American nuclear deterrent. We need a strategic dialogue with those who don’t have it, and that would make France stronger.”

Macron’s proposal , however, has faced resistance. Marine Le Pen, leader of France’s hard-right National Rally and a frontrunner to replace Macron in 2027, dismissed the idea as “totally unacceptable.”

Despite this, the concept is gaining traction in Germany, where Merz has indicated that discussions on a shared European nuclear deterrent will be part of his coalition negotiations in Berlin.

Manfred Weber, a Bavarian politician and leader of the powerful centre-right faction in the European Parliament, has suggested that a common nuclear deterrent could serve as a foundational step toward a unified European army, reported The Times.

Meanwhile, European officials remain anxious about reports suggesting t he US may reduce its troop presence on the continent. Although Washington has yet to confirm any withdrawal plans, speculation has intensified following reports that up to 20,000 American troops — initially deployed to NATO’s eastern flank in response to Russia’s invasion of Ukraine — could be recalled.

This would affect critical deployments, including a permanent US Army headquarters in Poznan, Poland, a 5,000-strong brigade combat team in Romania, and rotational rocket artillery units in the Baltic states.

Polish leaders have expressed concern about these rumours, especially given recent diplomatic tensions. Polish President Andrzej Duda, a staunch US ally, was left waiting for an hour in front of live television cameras before being granted a brief meeting with Trump.

The Polish press described the incident as a “humiliation” and a “cold shower.” Duda has insisted that no US official has given him any indication that American troops will be pulled from Poland, though speculation persists.

Will Ukraine be taken care of?

Despite these uncertainties, discussions on the rearmament bank continue, with European leaders exploring ways to increase defence spending while maintaining fiscal discipline. Starmer, who has been actively championing the initiative, announced a £1.6 billion deal allowing Ukraine to purchase 5,000 advanced air defence missiles from the UK.

He also indicated that multiple European countries had joined a “coalition of the willing” to provide direct military support to Ukraine, though he left it to individual governments to disclose their commitments.

However, divisions persist among European nations regarding the broader strategy. While France and Germany are leaning towards greater defence autonomy from the US, Poland and Italy continue to advocate for maintaining strong ties with Washington.

Italian Prime Minister Giorgia Meloni, meeting with Starmer in London, highlighted the need for transatlantic unity, stating, “If we divide ourselves, that will make us all weaker.” Similarly, Polish Prime Minister Donald Tusk called for the “closest possible alliance” with the US.

Despite these competing visions, European officials remain hopeful that the so-called “Weimar Plus” group — comprising Britain, France, Germany, Poland, and Italy — can forge a coherent and robust response to the crisis.

The proposed rearmament bank is set to play a central role in these efforts, ensuring that European nations have the financial resources to strengthen their defences and sustain Ukraine’s war effort in the long term.

With inputs from agencies