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The UK has offered a fraction of Brussels’ €6.7bn demand to join the EU’s €140bn rearmament programme, suggesting it contribute just €75mn.
EU member states are expected to reject the UK’s offer at a meeting on Wednesday afternoon, raising questions about whether a deal can be done by the November 30 deadline.
The Security Action for Europe (Safe) programme enables European countries to jointly procure new weapons by borrowing money guaranteed by the EU budget.
Under current rules, EU countries can spend up to 35 per cent of the rearmament fund with UK defence companies. If the UK joins Safe, this could rise as high as 50 per cent, but Brussels has said the UK’s contribution to the fund needs to reflect the benefits to UK industry.
Sir Keir Starmer, UK prime minister, met German Chancellor Friedrich Merz and French President Emmanuel Macron in Berlin on Tuesday night, where the issue of European security was discussed, according to Downing Street.
France has led a group of EU member states in demanding a high entry price for the UK, arguing that the scheme should favour the European defence industry.
UK defence secretary John Healey said on Wednesday that the UK wanted a deal, but not at any price.
“We’ve negotiated seriously throughout this period for participation in Safe. But we’ve always made clear whilst we were willing to pay a fair share of costs for this programme any deal had to be good value for money for our British taxpayers, had to be good value for our British defence industry, and I hope the [European] Commission will get to the point where we can participate.”
Although Brussels has set a November 30 deadline, EU officials said contracts with industry would only be signed next March, allowing some leeway for the UK to join later. Canada is also in talks to join the Safe programme.
Two EU officials told the Financial Times that the UK defence industry would receive between €10bn and €12bn even without joining the Safe programme.
“Negotiations this week will be decisive. We need a realistic approach,” said an EU diplomat.
The UK’s €75mn offer is based on the cost of repaying the interest on the EU loans and reflects Starmer’s view that Britain should only contribute a share of the administrative costs of setting up the fund and the costs associated with guaranteeing Safe loans.
One UK official said: “It is important to reiterate that the UK will not be able to draw from the loan, and this should be reflected in the financial contribution we make.”
They argued that, unlike the EU’s Horizon scheme, where the UK contributes funds to a pot from which British scientists can receive funding, the Safe programme is fundamentally different.
The official said: “Safe provides loans to member states to top up their national procurement budgets. Member states then purchase equipment from suppliers, such as those based in the UK, at market prices.
“It is not reasonable for the UK to pay additional costs to the EU just for the privilege of our industry supplying EU customers’ equipment at market prices.”
