France has proposed limiting the share of British-produced military components in the EU’s €150bn defence fund, a move that could complicate negotiations over the UK’s entry into the scheme.
According to diplomatic sources, French officials suggested a 50% ceiling on the value of UK components in projects financed through the Security Action for Europe (Safe) fund.
The €150bn loan scheme is part of the EU’s broader plan to boost defence spending by €800bn and strengthen the continent’s rearmament efforts. European Commission president Ursula von der Leyen recently highlighted the urgency of the programme, noting that loans had been assigned to member states within six months of the initiative being announced.
The path for greater UK participation was opened in May, when Prime Minister Keir Starmer and von der Leyen signed an EU-UK security and defence partnership. Without this agreement, the UK could provide no more than 35% of the value of components for any Safe-funded project.
However, a technical agreement is still required to define the terms of UK participation, including the fee for joining the scheme. While many EU member states favour flexibility in procurement and oppose strict limits on British inputs, France has long argued for a more autonomous European defence industry and has maintained that the UK, post-Brexit, should not enjoy full benefits of the EU single market.
British officials hope that formal entry into Safe will allow the UK defence sector to play a bigger role in European supply chains, providing equipment ranging from drones, ammunition and infantry weapons to precision artillery systems.
This week, senior EU diplomats are expected to discuss the UK’s entry into the scheme, alongside similar negotiations with Canada, which has also signed a defence and security pact with the bloc.
The European Commission has described the UK as an “essential partner and ally” with an advanced defence industry, stressing the goal of a “win-win agreement” to fully associate Britain with the Safe instrument.
Last week, the Commission confirmed that 19 EU countries had applied for Safe loans. Poland will receive the largest amount at €43.7bn – nearly one third of the total. France and Hungary are each set to borrow €16.2bn, Romania €16.7bn, and Italy €14.9bn. The loans, backed by the EU, lower borrowing costs for member states and can be used both to strengthen national armed forces and to support Ukraine.