Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential impact of Basel 3.1 banking regulations that come into force from 1st of January 2027 on the defence sector.

The Government has not undertaken a specific assessment of the potential impact of Basel 3.1 on lending to the defence sector. However, the Government is not currently aware of evidence to suggest that implementation of the reforms will have a material impact on lending to the sector.

In finalising its approach to implementing Basel 3.1, the PRA considered the available evidence on the impact of the reforms on UK lending, growth and competitiveness

The Government is not currently aware of evidence to suggest that implementation of the reforms will have a material impact on lending to the defence sector.

The Government recognises the importance of access to finance for the defence companies and will continue to work with the PRA, financial services firms and the defence sector as the new prudential framework is implemented.