UK to pay for EU defense fund access amidst growing Russia threat, FT reports
Britain will be required to pay the European Union a percentage of the value of any weapons acquired from U.K. companies through a Brussels-led defense fund. These plans, currently under development by the bloc, aim to counter the escalating threat from Russia, the Financial Times (FT) reported on July 21.
Prime Minister Keir Starmer announced in May that the U.K. would join the EU’s new 150-billion-euro ($170 billion) Security Action for Europe (SAFE) project, designed to boost military spending across the continent as part of a "reset" of bilateral relations. Starmer said that participating in Safe would provide "new opportunities for our defense industry, supporting British jobs and livelihoods."
However, London must recompense Brussels for its involvement in the EU-backed scheme, which seeks to procure drones, missile defense systems, and other capabilities, two EU diplomats told FT. "What was written in the Safe regulation is that there shall be a fair balance as regards the contributions and the benefits" of outside countries such as the UK, one of the diplomats explained.
The SAFE fund forms part of a broader EU effort to mobilize 800 billion euros in new defense spending by 2030, driven by the growing threat from Russia and calls from U.S. President Donald Trump for Europe to shoulder more of its own security costs.
Launched in May, the fund's loans will enable member states and designated "third countries," including the U.K., to engage in joint procurement. The scheme intends to leverage the EU’s credit strength to increase overall defense spending while simultaneously improving the efficiency and unity of Europe’s armed forces, which often grapple with inefficient and duplicative procurement processes.
The exact financial contribution Britain will have to make to access the fund remains under discussion among member states as they finalize their position on the agreement with the U.K., expected for publication this week.
Diplomats clarified that since British businesses would receive EU funding to create jobs and expand capacity under the scheme, London should compensate Brussels. If U.K. companies win contracts funded by SAFE money, the U.K. government must pay a percentage into the fund to help balance the economic benefit of those contracts, a diplomat added. This same mechanism would apply to Canada and any other countries whose industries wish to access the funds.
For U.K. defense products to qualify, at least 65% of their component value must originate from Safe members, which include the EU, Ukraine, Iceland, Liechtenstein, Norway, Switzerland, and any joining third countries. Senior U.K. officials indicated that France is negotiating hard with other member states to agree on an EU negotiating mandate this week, with one describing the situation as "tricky."
Under the EU’s terms, countries must submit bids for the loans by July 29, with a maximum allocation of 150 billion euro. They would then partner with another Safe member to purchase weapons, aiming to reduce prices by pooling demand. The U.K. would need to utilize national funds to participate in such projects.
Third countries must first sign a security and defense partnership with the EU, followed by a specific agreement to join Safe. Britain signed the initial partnership agreement at the reset summit in London in May and will negotiate the second agreement once the EU establishes its mandate. All the projects must be submitted by the end of November, with the European Commission, the EU’s executive body, responsible for approving them.
