UK to begin talks on access to EU defence loans for British firms
Negotiations would set limits on British participation and fees as the EU's €150 billion defence-loan scheme moves forward
The UK is set to begin talks over British companies' ability to take part in military projects funded by EU defence loans, as the European Commission plans to deploy up to €150 billion in loans to bolster joint purchases across EU members.
The European Commission's Security Action for Europe (SAFE) scheme would borrow up to €150bn (£130bn) to fund long-duration loans to support projects involving at least two EU countries. The loans are intended to help member states with higher borrowing costs access the Commission's favourable credit rating and to fund equipment such as ammunition, artillery, missile-defence systems and military drones. The UK cannot apply directly for the loans, but a defence pact agreed with the EU in May paved the way for UK-based defence companies to contribute to projects backed by the scheme. Officials will now thrash out a deal to set the details of British participation in the coming weeks, after EU ministers formally authorised negotiations on Thursday. The talks are expected to focus on how much British firms can contribute to a project and whether the UK should pay an entry fee to take part. At present, UK defence companies would be limited to supplying 35% of the total value of a finished defence product, though that cap could be adjusted during negotiations. France is reportedly keen to limit the share available to non-EU participants.
Defence Secretary John Healey has said the UK is willing to pay its "fair share" in financial contributions to access the scheme, but wants to "have a say" in programmes and to retain UK intellectual property rights. Nick Thomas-Symonds, the minister responsible for EU relations, has said he wants a deal in place to allow British companies to take part in the first round of bids, with applications due by the end of November.
So far, 19 of the 27 EU member states have applied for the loans, which are expected to be issued early next year. Poland has been allocated the largest share at €43.7bn, followed by Romania with €16.6bn, with Hungary and France each allocated about €16.2bn.
The talks reflect a broader effort to strengthen Europe’s defensive capabilities in the wake of Russia’s invasion of Ukraine and to integrate member states’ procurement in a way that could include non-EU participants under agreed terms.