MPs have welcomed a move by the financial watchdog, clarifying that defence investments aren’t constrained by green or sustainability rules.

The Financial Conduct Authority (FCA) released a statement on Tuesday morning clarifying their position on sustainability and defence investments.

A spokesperson said: “Our sustainability rules do not prevent investment in or finance for defence companies. The financial sector plays a vital role in supporting all sectors, including defence.

“There is nothing in our rules, including those related to sustainability, that prevents investment or finance for defence companies.  

“Our sustainable finance rules apply to firms providing financial products and services as well as some listed companies. They do not require financial institutions to treat defence companies differently because they are in the defence sector.”

It comes after Prime Minister Keir Starmer announced the UK would move from spending 2.3 per cent of GDP on defence to 2.5 per cent from April 2027, with an ambition to reach three per cent in the next parliament.

No10 has framed the move as the biggest investment in defence spending since the Cold War.