Canada and the UK Strengthen Defence Ties and Investment Pledge

Canada and the United Kingdom are prioritizing their defence spending and industry collaboration to address the increasingly unpredictable global landscape. The Government of Canada is shifting its defence approach to benefit the Canadian Armed Forces, industry, and economy, building on the National Security Strategy 2025 and the North Atlantic Treaty Organization's Defence Investment Pledge. Canada's Prime Minister Carney has tasked a new Defence Procurement Agency to oversee a comprehensive rearmament and investment plan, focusing on reaching the 2% of gross domestic product target by March 31, 2026. This will involve an additional $9.3 billion in the fiscal year 2025-26, bringing Canada's total defence budget to approximately $63 billion.

Key Takeaways:

• Canada is shifting its defence spending approach to benefit the Canadian Armed Forces, industry, and economy.
• The Government of Canada is aiming to reach the 2% of gross domestic product target by March 31, 2026, requiring an additional $9.3 billion in the fiscal year 2025-26.
• The total defence budget will increase to approximately $63 billion, with a focus on rebuilding and rearming the Armed Forces.
• A new Defence Procurement Agency is being established to oversee the defence spending and industry collaboration efforts.
• Canada and the UK already share a strong record of industrial collaboration in defence procurement, as seen in the BAE Type 26 Global Combat Ship project.
• The Type 26 project is a prime example of how collaboration can deliver world-class capabilities and lasting economic benefits, with benefits for both Canadian and UK industries.
• Canada has a robust defence industry, contributing nearly $10 billion to its gross domestic product and sustaining over 81,000 jobs.
• The country has a strong global footprint, with approximately 60% of its sales coming from exports.
• Over 200 Canadian companies participated in Defence and Security Equipment International, showcasing Canada's largest-ever presence at the expo.
• Canada has signed onto Readiness 2030, Europe's largest-ever defence mobilization framework, and is at the negotiating table for the associated Security Action for Europe agreement.

Statistics:

• $9.3 billion: the additional amount required to reach the 2% of gross domestic product target by March 31, 2026.
• $63 billion: the approximate total defence budget of Canada.
• 2026: the target year for reaching the 2% of gross domestic product target.
• 2025-26: the fiscal year in which the additional $9.3 billion will be invested.
• 60%: the percentage of Canada's defence industry sales coming from exports.
• $10 billion: the contribution of the defence industry to Canada's gross domestic product.
• 81,000: the number of jobs sustained by the Canadian defence industry.
• 200: the number of Canadian companies participating in Defence and Security Equipment International.

Sources:

• Government of Canada: Canada--United Kingdom Defence Gateway -- Market Briefing September 8, 2025
• National Security Strategy 2025
• North Atlantic Treaty Organization's Defence Investment Pledge