UK and EU Defence Deal Talks Stall Over Funding and Rules of Origin
Brussels – negotiations between the United Kingdom and the european Union regarding a notable defense pact have reached a standstill, primarily due to disagreements over financial contributions and the sourcing of components, according to sources familiar with the discussions. The impasse threatens to limit British participation in a key EU initiative designed to bolster Europe’s defense capabilities amid heightened geopolitical tensions.
The proposed agreement centers around the European Defence Fund (EDF) and the security Assistance for Ukraine (SAFE) mechanism. While the UK has expressed strong interest in collaborating with the EU on defense matters – viewing it as complementary to bilateral partnerships with individual member states – substantial hurdles remain. At issue is a UK contribution to the EDF, which London believes should reflect only administrative and loan guarantee costs, rather than a fee simply for access. A U.K. official stated it was “not reasonable to pay the EU just for the privilege of access.”
The current rules of the SAFE program, which provides financial support for defense companies, allow components from non-member countries to constitute up to 35 percent of a product’s value. The UK is pushing for this threshold to be raised to 50 percent or higher, a change that would considerably increase the participation of its robust defense industry.
The situation follows a period of warming relations between UK Prime minister rishi Sunak and European Commission President Ursula von der leyen, who exchanged positive remarks in May.Despite this diplomatic progress,the financial and technical complexities of the defense agreement are proving difficult to overcome.
The UK maintains it is indeed adopting a “pragmatic approach” and views a strong EU-UK relationship as a crucial element in strengthening European defense alongside bilateral ties with member states. Though, resolving the current disagreements will be essential to unlock deeper collaboration and ensure the UK can fully contribute to the continent’s security architecture.
Jon Stone contributed to this report.
