In a dramatic twist, the UK is poised to walk away from a major EU defence programme, as tensions rise over a hefty financial demand from France.
A French diplomatic source dismissed British complaints (Image: Getty)
Ministers have warned the European Union that the UK will abandon the bloc’s rearmament programme after rejecting French demands to pay more than £5 billion to participate. The move comes after months of negotiations between British officials and Brussels to take part in a €150 billion (£132 billion) loan scheme designed to fund the purchase of weapons by European states to counter the threat of Russian aggression.
Sir Keir Starmer had expressed his support for British participation in the Security Action for Europe (Safe) programme during the summer, stating that it would provide opportunities for the UK’s defence industry and support British jobs and livelihoods. However, the plans have been derailed after the French demanded British taxpayers contribute €6.5 billion (£5.7 billion) to EU budgets in order for UK defence firms to be allowed to bid for a limited proportion of contracts under the scheme, reports The Times.
The UK side has rejected the French demands and offered “less than £1 billion” to take part, leading to a stalemate in the negotiations. Starmer is understood to have raised the issue with Ursula von der Leyen, the European Commission president, last week, but the issue remains unresolved.
Growing pessimism over reaching agreement as deadline approaches
With a deadline for a deal coming at the end of the month, there is growing pessimism that an agreement can be reached. A senior UK source stated, “The terms that are on offer are not acceptable and the French are refusing to budge. As things stand at the moment, we will walk away.”
The source added that walking away might not be a bad thing, as it would clearly demonstrate that the UK will only accept terms that are in its national interest, and paying over £5 billion to the EU clearly isn’t.
A UK official stated that Britain still wants to take part in the scheme but only if the terms are “reasonable and fair.” The official acknowledged that the current terms are neither reasonable nor fair, but the UK remains at the negotiating table.
Macron’s stance on high financial contributions from Britain
President Macron of France has made high financial contributions from Britain a condition for any participation by British arms companies in the Safe programme, which is based on EU loans guaranteed by the Brussels budget, attracting lower interest rates than many European governments can secure on the markets.
The lower borrowing rates are attractive to Britain, which is facing a fiscal squeeze. However, France, which is also facing market pressure, argues that after leaving the EU, the UK is not entitled to benefit unless taxpayers “pay to play.”
A French diplomatic source dismissed British complaints, stating, “The British are indeed free to make their own choices and no one is forcing them to use Safe. If the borrowing rates [on the loans] are excellent, it’s thanks to the internal market that the UK wanted to leave.”
