The government has no national plan for the defence of the UK or the mobilisation of its people and industry in a war despite renewed threats of conflict, Sky News has learnt.
With ministers warning that Britain is moving to a “pre-war world” amid mounting concerns about Russia, China and Iran, it can be revealed that officials have started to develop a cross-government “national defence plan”.
But any shift back to a Cold War-style, ready-for-war-footing would require political leaders to make defence a genuinely national effort once again – rather than something that is just delivered by the armed forces, according to interviews with multiple defence sources, former senior officers and academics.
They said such a move would need a lot more investment in defence and much better communication with the public about the need for everyone to play their part in strengthening UK resilience and deterring aggression.
“We have to have a national defence plan,” a senior defence source said, speaking on condition of anonymity.
“It should involve what government arrangements would look like in the period before armed conflict and the transition to war.”
Image: British soldiers during drills near Tapa, Estonia. Pic: AP
It can also be revealed:
• A two-day “war game” is set to take place next week, involving officials from the Ministry of Defence, Cabinet Office, Home Office and other departments, to talk through how the country would respond to an armed attack
• A paper is circulating in Whitehall that examines what can be learnt from an old but comprehensive system of plans called the Government War Book – now sitting in the National Archives – that once detailed how the UK would transition from peace to war
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• Sources say lessons could also be drawn from how the UK mobilised its industrial base ahead of the Second World War when it created a network of “shadow factories” that vastly expanded production capacity for aircraft such as Spitfires
He also forecast that in five years’ time “we could be looking at multiple theatres involving Russia, China, Iran and North Korea”.
Given the warning signs, Sky News has decided to explore how prepared the UK government, its military and the entire nation are for the possibility of armed conflict.
We have also looked back at the last time Britain was in a pre-war world, in the five years before the Second World War that erupted in 1939, as well as how this country subsequently dealt with the possibility of World War 3, including nuclear attack, during the Cold War years.
In the first instalment of a series – called Prepared For War? – we visited the National Archives to view a Government War Book; travelled to an old nuclear bunker once part of a secret plan to support the nation in the event of nuclear war; and examined the legacy the World War 2 shadow factories, which built the weapons that helped defeat the Nazis.
Image: Inside the nuclear bunker
‘The problem is, there is no plan’
Setting out the challenge, Keith Dear, a former regular Royal Air Force intelligence officer who worked as an adviser to the prime minister between 2020 and 2021, when Boris Johnson was in power, said he had been unable to find any kind of detailed plan for war while in government.
He said specific planning is required to explain “what we think could happen, and specifically who needs to do what, when, to respond effectively”.
In an exclusive article for Sky News, he wrote: “Such plans are essential not only to avoid scrambling disorder and early defeats, but also so that our adversaries, awed by our preparedness, are deterred from fighting in the first place.
“The problem is, there is no plan.”
Instead, defence sources said the UK today relies on its arsenal of nuclear weapons and membership of the NATO military alliance to deter threats.
“The government assumes deterrence will always work, but no one stops to ask: what if it doesn’t?” the senior defence source claimed.
Image: Deborah Haynes examines a holographic map
The apparent lack of a national defence plan means the army, Royal Navy and Royal Air Force – let alone the readiness of the civilian population and industrial base – are not designed to fight an enduring war of survival, the defence sources said.
“Our air defence [the ability to fend off incoming enemy missiles and drones] is dangerously thin and coastal defence is all-but non-existent,” the senior defence source said.
There is also a shortage of weapons and ammunition, while the size of all three services, both regular and reserve, is a fraction of the force that was kept at a high level of readiness during the Cold War in case of World War Three.
General Sir Richard Barrons, a former top commander, said he raised the idea inside government just over a decade ago about the need to rebuild national defence and resilience because of a growing threat from Moscow.
But “the implications of thinking about the revitalisation of a risk from Russia were unpalatable and expensive and denial – frankly – was cheaper”, he said.
Image: General Sir Richard Barrons speaks to Deborah Haynes
War books
In the wake of Russia’s full-scale invasion of Ukraine two years ago, NATO refreshed its war plans for defending the whole of the now 32-nation alliance.
But the UK used to have its own corresponding set of national plans – set out in the Government War Book – that would trigger certain internal measures if the alliance decided to transition from peace to war.
Image: Sky News looked at a preview war book
A 1976 copy of the war book – a large bundle of hand-typed pages, bound together by string – offered a sense of how seriously the UK once took national defence planning.
Stored at the National Archives in Kew, west London, the war book contained detailed lists and signposted the way to complementary plans about how to mobilise not just the military but also civilians and industry in a crisis as well as shutting schools, clearing hospitals, rationing food and even storing national treasures.
Image: The war book contains plans for different eventualities
Conceived around the end of the First World War, the government’s collection of top secret, regularly rehearsed and updated war books ensured by the height of the Cold War the UK was one of the best prepared nations in the world – and most resilient.
That all changed after the collapse of the Soviet Union as Western governments no longer felt the existential threat of global war.
By the early 2000s, the entire UK war book system, which cost a lot to maintain, was quietly shelved as the then government’s focus switched to the threat from Islamist terrorism and fighting foreign wars in Afghanistan and Iraq.
It means most senior officials in today’s Whitehall will barely have any professional memory of how the state functioned during the Cold War years, let alone the two world wars.
Jonathan Boff, a professor of military history at Birmingham University, said the UK should think about producing a modern-day version of the war books.
“Some of that kind of thinking – the thinking that takes you from: we don’t need to worry about any of that to: actually if we did want to worry about that, how might we do it? – I think that’s really important,” he said.
Image: HMS Prince of Wales leads a formation of 15 ships. Pic: MOD/AP
Risk register and intelligence framework
Asked about the allegation that the UK has no national plan for the outbreak of war, a spokesperson for the Cabinet Office said the country has “robust plans in place for a range of potential emergencies and scenarios with plans and supporting arrangements developed, refined and tested over many years”.
This includes the Civil Contingencies Act, a government resilience framework, a National Risk Register and a strengthening of ties with a network of local resilience forums across the country that are tasked with responding to emergencies. There is also a new directorate in the Cabinet Office tasked with further enhancing resilience.
Image: Pilots of RAF F-35B Lightning jets. Pic: PA
“As part of broad emergency response capabilities, all local resilience forums have plans in place to respond to a range of scenarios,” the spokesperson said.
“The government continues to review the risk landscape, including threats to the UK from overseas.”
Yet a flick through the National Risk Register offers a lot more information on floods, pandemics, terrorism and cyber attacks than what to do in the event of war.
A number of local resilience forums approached by Sky News also confirmed that they do not have specific war plans or planning for a nuclear strike – something that would have been a top priority for local governments during the Cold War.
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The funding priorities for many NATO allies, including the UK, changed following the demise of the Soviet Union in 1991, with investment switching away from defence to areas such as health and social services – more popular in peacetime.
This has started to be reversed following Vladimir Putin’s invasion of Ukraine, but defence sources said it must happen with much greater urgency – especially as Russia is on a war footing and has even threatened the use of nuclear weapons.
Back in 1935, when war with Adolf Hitler’s Germany was looming, the UK began rapidly growing its manufacturing base to build more aircraft, converting automotive plants to produce Spitfires, Hurricanes, Lancaster bombers and other kit.
Image: ‘Shadow factories’ were set up in the 1930s
A programme, called the “shadow scheme”, under the then Air Ministry, saw the construction of “shadow factories” next to existing automotive-turned-aircraft plants.
But the UK’s manufacturing landscape has consolidated in recent years, while many weapons are imported, making it harder to revive sovereign industrial capacity at speed.
Keith Dear, the former Downing Street adviser, pointed at the difficulties Britain has had increasing the production of artillery shells and other ammunition to support Ukraine.
“Our inability to supply anything like enough munitions or weapons to Ukraine, shows also how hollowed out we have become by buying and building armed forces to no coherent war-fighting plan,” he wrote. “Weapons without ammunition are useless.”
Image: A Royal Navy Merlin helicopter fires flares during a NATO exercise. Pic: Reuters
‘We aren’t ready – but don’t tell Putin’
Southampton is a reminder of the UK’s former wartime resilience.
The home of the Spitfire, production lines were dispersed around the city after German bombers attacked its two main aircraft factories early on in the Second World War.
Today, Alan Matlock, a local man, heads a group called the Spitfire Makers Charitable Trust that raises awareness about the historic bravery of Southampton’s residents.
“The frontline did run through these factories,” he said. “And there were a large number [of people] who paid the ultimate price.”
Vera Saxby, who turns 100 in August, decided to do secretarial work for a company that made parts for Spitfires during the war after a German bomb exploded in her garden.
“We really thought we were doing something good,” she said.
Image: Former Spitfire worker Vera Saxby
However, resting in an armchair in her house in a Southampton suburb, Mrs Saxby said she did not think Britain was very resilient anymore – pointing in particular to the reduction in heavy industry, such as steel works and car plants that were so vital during the last war.
Asked if it was worrying, Mrs Saxby said: “Well it is but I’m too old to worry anymore… I can’t see how we would defend ourselves – but don’t tell Putin that.”
A spokesperson for the Ministry of Defence said: “We have a range of plans in place to secure and defend the country, which are reviewed and adapted in response to international security developments… These plans will be integrated as part of our contribution to ongoing work to develop a cross-government National Defence Plan, which will further enhance our preparedness and strengthen our deterrence for the future.”
Several crypto-linked stocks climbed on Friday as prediction-market odds of a December rate cut surged to 87% on Polymarket, the highest level this month.
Three US-listed Bitcoin miners led the rally, with Cleanspark, Riot Platforms and Cipher Mining all rising in the session and showing double-digit gains over the past five days.
Probability of a US rate cut in December. Source: Polymarket
Yahoo Finance data showed Circle, the issuer of USDC, jumped nearly 10% in early trading, while Michael Saylor’s Strategy and Coinbase notched more modest increases at the time of writing.
Bitcoin (BTC) was also up around 7% on the week, after dropping to around $82,000 on Nov. 21, according to CoinGecko data.
Much of the volatility in prediction-market pricing this month has been driven by comments from Federal Reserve officials.
On Oct. 29, Fed Chair Jerome Powell said a December cut was “not a foregone conclusion,” a remark investors took as hawkish — which means the Fed could delay rate cuts and keep conditions tight. Polymarket odds slipped from 89% the day before to as low as 22% by Nov. 20.
Sentiment shifted on Nov. 17 after Fed Governor Christopher Waller said the central bank should consider cutting rates next month, arguing that “the labor market is still weak and near stall speed” and that inflation is now “relatively close” to the Fed’s 2% target.
Prediction markets, such as Kalshi and Polymarket, which enable bettors to wager on the outcomes of real-world events, have expanded their reach and influence this year.
On Nov. 13, Polymarket inked a multi-year agreement with TKO Group Holdings to serve as the official prediction-market partner for the Ultimate Fighting Championships and Zuffa Boxing. The partnership came shortly after it partnered with North American fantasy sports operator PrizePicks.
The same month, Kalshi raised $1 billion from Sequoia Capital and CapitalG, pushing its valuation to $11 billion, according to a TechCrunch report citing a person familiar with the deal. The new round followed a $300 million raise in October.
On Nov. 19, rumors emerged that Coinbase is developing its own prediction-market platform after tech researcher Jane Manchun Wong posted screenshots of an unreleased site. Wong’s images indicated the product would be offered through Coinbase Financial Markets and backed by Kalshi.
On Wednesday, Robinhood said prediction markets have quickly become one of its fastest-growing revenue drivers, with more than one million users trading nine billion contracts since the product launched in March through a partnership with Kalshi.
This week, cryptocurrency markets staged a long-awaited recovery, following four consecutive weeks of downside momentum.
Bitcoin’s (BTC) price reclaimed the $90,000 psychological mark on Wednesday, bringing some much-needed relief for Bitcoin exchange-traded fund (ETF) holders, who were once again back in profit as BTC traded above the key $89,600 flow-weighted cost basis of ETF buyers.
Bolstering investor sentiment, Cathie Wood, the CEO and chief investment officer of ARK Invest, said the company’s $1.5 million Bitcoin bull market price prediction remained unchanged, pointing to billions in returning liquidity following the end of the US government shutdown.
The crypto market recovery followed a sharp increase in expectations of interest rate cuts in the US, with odds rising by 46% in a week. Markets are pricing in an 85% chance of a 25 basis point interest rate cut at the US Federal Reserve’s Dec. 10 meeting, up from 39% a week before, according to the CME Group’s FedWatch tool.
However, Bitcoin is still facing the worst November in seven years, as the world’s first cryptocurrency is down about 17% on the monthly chart, despite the month averaging 41% historic Bitcoin returns, according to blockchain data provider CoinGlass.
Cathie Wood says ARK’s $1.5 million Bitcoin bull price hasn’t changed as markets eye rally
Equities and cryptocurrency markets may be setting up for a year-end reversal as liquidity improves and US monetary policy turns more supportive following the end of the record government shutdown.
Improving market conditions will be driven by the increasing liquidity, which has already returned $70 billion into markets since the end of the US government shutdown, with another $300 billion expected to return over the next five to six weeks as the Treasury General Account normalizes, according to investment management company ARK Invest.
Another potential catalyst will arrive on Dec. 1, when the US Federal Reserve is scheduled to end its quantitative tightening program and pivot toward quantitative easing, a shift that involves bond-buying to lower borrowing costs and stimulate economic activity.
“With liquidity returning, quantitative tightening (QT) ending December 1st, and monetary policy turning supportive, we believe conditions are building for markets to potentially reverse recent drawdowns,” wrote Ark in a Wednesday X post.
The current “liquidity squeeze” limiting the upside of the cryptocurrency and artificial intelligence markets is set to “reverse in the next few weeks,” wrote Cathie Wood, the CEO and chief investment officer of ARK Invest, in a Thursday X post.
Earlier in April, ARK Invest predicted a 2030 Bitcoin (BTC) price target of $1.5 million in the company’s “bull case,” and a $300,000 price target in the “bear case.”
Bitcoin price target for 2030. Source: Ark-invest.com
Despite the recent crypto market correction and stablecoins subtracting from Bitcoin’s role as a safe-haven asset, the bullish price target remains unchanged.
“The stablecoins have accelerated, taking some of the role away from Bitcoin that we expected,” but the “gold price appreciation has been far greater than we expected,” explained Wood during a webinar on Monday, adding:
“So net, our bull price, which most people focus on, really hasn’t changed.”
Webinar by Cathie Wood, the CEO and chief investment officer of ARK Invest. Source: Ark-funds.com
UK takes “meaningful step forward” with proposed DeFi tax overhaul
The UK has floated a new tax framework that eases the burden on decentralized finance (DeFi) users, with deferred capital gains taxes on crypto lending and liquidity pool users until the underlying token is sold, which the local industry has welcomed.
HM Revenue and Customs (HMRC) proposed on Wednesday a “no gain, no loss” approach to DeFi that would cover lending out a token and receiving the same type back, borrowing arrangements and moving tokens into a liquidity pool.
Taxable gains or losses would be calculated when liquidity tokens are redeemed, based on the number of tokens a user receives back compared to the number they originally contributed, according to the proposal.
Currently, when a user deposits funds into a protocol, regardless of the reason, the move may be subject to capital gains tax. In the UK, capital gains tax rates can vary from 18% and 32%, depending on the action.
Tax framework a “positive signal” for UK crypto regulation
Sian Morton, marketing lead at the crosschain payments system Relay protocol, said HMRC’s no gain, no loss approach is a “meaningful step forward for UK DeFi users who borrow stablecoins against their crypto collateral, and moves tax treatment closer to the actual economic reality of these interactions.”
“A positive signal for the UK’s evolving stance on crypto regulation,” she added.
Maria Riivari, a lawyer at the DeFi platform Aave, said the change “would bring clarity that DeFi transactions do not trigger tax until you truly sell your tokens.”
“Other countries facing similar questions may want to take note of HMRC’s approach and the depth of research and consideration behind it,” she added.
DWF Labs launches $75 million fund for “institutional phase” of DeFi
Crypto market maker and Web3 investment firm DWF Labs says it is investing up to $75 million in decentralized finance projects that could support institutional adoption.
The company shared its announcement via X on Wednesday, saying the fund will support projects with “innovative value” propositions that can scale to support large-scale adoption.
“The initiative will target blockchain projects building dark-pool perpetual DEXs, decentralized money markets, and fixed-income or yield-bearing asset products, […] areas the firm believes are poised for major growth as crypto liquidity continues its structural migration onchain,” DWF Labs said.
“DeFi is entering its institutional phase,” he said, adding: “We’re seeing real demand for infrastructure that can handle size, protect order flow, and generate sustainable yield.”
The fund will focus on projects built across Ethereum, BNB Smart Chain and Solana, as well as Coinbase’s Ethereum layer-2 Base.
Alongside capital injections, DWF Labs will also offer support in ways such as “TVL and crypto liquidity provisioning, hands-on go-to-market strategy and execution support,” access to partnered exchanges, market makers, infrastructure providers and institutions in crypto.
Balancer community proposes plan to distribute funds recovered from hack
Two members of the Balancer protocol community submitted a proposal on Thursday outlining a distribution plan for a portion of the funds recovered from the protocol’s $116 million November exploit.
About $28 million from the $116 million heist was recovered by white hat hackers, internal rescuers and StakeWise — an Ether (ETH) liquid staking platform.
However, the proposal covers only the $8 million recovered by white hat hackers and internal rescue teams, while the nearly $20 million retrieved by StakeWise will be distributed separately to its users.
Balancer community proposal to distribute recovered funds. Source: Balancer
The authors proposed that all reimbursements should be non-socialized, meaning that funds would be distributed only to the specific liquidity pools that lost the funds and paid out on a pro-rata basis according to each holder’s share in the liquidity pool, represented by Balancer Pool Tokens (BPT).
Reimbursements should also be paid in-kind, with victims of the hack receiving payment denominated in the tokens they lost to avoid price mismatches between different digital assets, according to the authors.
The Balancer hack was one of the “most sophisticated” attacks in 2025, according to Deddy Lavid, the CEO of blockchain cybersecurity company Cyvers, highlighting the need for crypto user safety as security threats continue to evolve.
Nasdaq-listed Enlivex plans $212 million RAIN token play with ex-Italian PM onboard
A Nasdaq-listed biotech firm is raising $212 million in a late-cycle pivot into crypto, planning to buy the token of a decentralized prediction market even as other digital-asset treasuries (DATs) struggle to stay afloat.
Enlivex Therapeutics (ENLV), a clinical-stage macrophage reprogramming immunotherapy company, said on Monday it plans to raise $212 million through private investment in public equity, selling 212 million shares at $1 each. The price represents an 11.5% discount to Friday’s close, according to the company’s filing with the US Securities and Exchange Commission.
The company plans to invest the majority of the $212 million in Rain (RAIN), the utility token behind the Rain decentralized prediction market on the Arbitrum network, marking the first corporate strategy centered on a prediction market token, according to a Monday announcement shared with Cointelegraph.
“We see prediction markets as one of the most exciting emerging sectors in the blockchain space,” with “exceptional” long-term growth potential, Shai Novik, executive chairman at Enlivex Therapeutics, told Cointelegraph.
“By entering now, we benefit from a first-mover advantage in a fundamentally strong category.”
When asked about the reason for choosing the Rain protocol, Novik said that its “decentralized” architecture stood out, as it serves as a “scalable model which supports global access and growth.”
Enlivex expects to complete its Rain purchases within 30 days of the offering’s close.
According to data from Cointelegraph Markets Pro and TradingView, most of the 100 largest cryptocurrencies by market capitalization ended the week in the green.
The SPX6900 (SPX) memecoin rose over 43% as the week’s biggest winner, followed by the Layer-1 blockchain Kaspa’s (KAS) token, up 39% during the past week.
Total value locked in DeFi. Source: DefiLlama
Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically advancing space.
Rachel Reeves needs to “make the case” to voters that extending the freeze on personal income thresholds was the “fairest” way to increase taxes, Baroness Harriet Harman has said.
Speaking to Sky News political editor Beth Rigby on the Electoral Dysfunction podcast, the Labour peer said the chancellor needed to explain that her decision would “protect people’s cost of living if they’re on low incomes”.
In her budget on Wednesday, Ms Reeves extended the freeze on income tax thresholds – introduced by the Conservatives in 2021 and due to expire in 2028 – by three years.
The move – described by critics as a “stealth tax” – is estimated to raise £8bn for the exchequer in 2029-2030 by dragging some 1.7 million people into a higher tax band as their pay goes up.
Image: Rachel Reeves, pictured the day after delivering the budget. Pic: PA
The chancellor previously said she would not freeze thresholds as it would “hurt working people” – prompting accusations she has broken the trust of voters.
During the general election campaign, Labour promised not to increase VAT, national insurance or income tax rates.
He has also launched a staunch defence of the government’s decision to scrap the two-child benefit cap, with its estimated cost of around £3bn by the end of this parliament.
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4:30
Prime minister defends budget
‘A moral failure’
The prime minister condemned the Conservative policy as a “failed social experiment” and said those who defend it stand for “a moral failure and an economic disaster”.
“The record highs of child poverty in this country aren’t just numbers on a spreadsheet – they mean millions of children are going to bed hungry, falling behind at school, and growing up believing that a better future is out of reach despite their parents doing everything right,” he said.
The two-child limit restricts child tax credit and universal credit to the first two children in most households.
The government believes lifting the limit will pull 450,000 children out of poverty, which it argues will ultimately help reduce costs by preventing knock-on issues like dependency on welfare – and help people find jobs.
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8:46
Budget winners and losers
Speaking to Rigby, Baroness Harman said Ms Reeves now needed to convince “the woman on the doorstep” of why she’s raised taxes in the way that she has.
“I think Rachel really answered it very, very clearly when she said, ‘well, actually, we haven’t broken the manifesto because the manifesto was about rates’.
“And you remember there was a big kerfuffle before the budget about whether they would increase the rate of income tax or the rate of national insurance, and they backed off that because that would have been a breach of the manifesto.
“But she has had to increase the tax take, and she’s done it by increasing by freezing the thresholds, which she says she didn’t want to do. But she’s tried to do it with the fairest possible way, with counterbalancing support for people on low incomes.”
She added: “And that is the argument that’s now got to be had with the public. The Labour members of parliament are happy about it. The markets essentially are happy about it. But she needs to make the case, and everybody in the government is going to need to make the case about it.
“This was a difficult thing to do, but it’s been done in the fairest possible way, and it’s for the good, because it will protect people’s cost of living if they’re on low incomes.”