UK FACES WEAPONS FUND SHUT OUT DESPITE SOFTER BREXIT DEAL WITH EU

British defence companies could be frozen out of billions of pounds-worth of arms deals as some EU nations push to freeze the UK out of its new weapons fund, despite Sir Keir Starmer’s Brexit reset deal.

The Prime Minister on Monday agreed a security and defence partnership with the EU, a centrepiece of his reset deal, which both sides said would pave the way for British firms to bid for loans from the EU’s 150bn euro (£126bn) rearmament fund, known as Safe.

The fund, agreed on Monday, will offer loans to EU nations to buy arms, as long as the bulk is spent with companies in participating European countries. It comes in the face of increased threat from Russia and the US wanting to withdraw from backing Europe.

There was disappointment from Conservatives and defence experts, however, that Starmer’s agreement did not guarantee the UK’s terms of access to EU defence-industrial projects, which the Prime Minister on Tuesday told MPs would “British jobs, British wages and British livelihoods”.

Now in a sign that some EU member states are pushing to restrict UK involvement even after the agreement, a European diplomatic source said British weapons firms’ access will be restricted by “conditions” which ensure a continuation of the “European preference” for rearmament.

While not elaborating on what these “conditions” might be, it is probable they involve limiting how much the UK can borrow from the fund.

BAE and Rolls-Royce could lose out

This could mean that UK firms such as BAE Systems – the biggest defence company in Europe – and Rolls-Royce, will lose out to the French firm Dassault, which makes the Rafale jet fighter, and the Franco-German firm KNDS, which makes Leopard tanks.

Reports last week, before the UK and EU’s deal, suggested that France wanted to freeze Britain out of 85 per cent of the fund.

It suggests splits remain in the EU over Britain’s involvement, with other countries such as Germany viewing deep participation for Britain, the region’s biggest defence player, as key if Europe wants to become self-reliant after Donald Trump’s pullback of US support for the continent’s security.

The diplomatic source told The i Paper that the UK’s access would be “subject to conditions due to its third-country status”, adding this would be “in accordance with the objectives of European preference” and strengthening the EU’s own technology and industrial base.

Others have said UK firms will only have access to Safe loans for procurement projects done jointly with EU counterparts.

This in itself is not unusual, with BAE building the Typhoon fighter jet in collaboration with Italy’s Leonardo and the France-headquartered Airbus.

The i Paper however understands that ministers in Whitehall are optimistic after European Commission president Ursula von der Leyen said the UK-EU deal signed on Monday “opens the door towards joint procurement”, and that this second element of defence-industrial collaboration could be agreed in “only a few weeks”.

EU foreign affairs chief Kaja Kallas hinted at the splits as she attended the Lancaster House summit on Monday at which the deal was signed, saying the “wounds of Brexit” mean some countries want the UK to only have a limited role.

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Kallas hinted that she favoured better British access, telling Sky News the EU should try and have it “both” ways.

“We should invest more in European industry. But we should also co-operate with our outside partners like the UK,” she said.

Speaking in the House of Commons on Tuesday the Prime Minister said: “When Russian tanks rolled into Ukraine over three years ago now, the gauntlet was thrown down, and it’s our responsibility to step up.

“That is what this world demands and it’s what this partnership delivers, strengthening our national security through our new security and defence partnership.

“That paves the way for British defence firms to access the EU’s €150bn defence fund – that will support British jobs, British wages, British livelihoods.”

2025-05-20T17:55:15Z