Negotiations between the United Kingdom and European Union regarding British defense companies’ participation in the €150 billion (£130bn) SAFE loan program have reached an impasse due to unresolved financial disagreements. The breakdown occurred just before Sunday’s deadline for EU member states to submit initial funding applications for the massive rearmament initiative.
The core disagreement centered on the substantial entry fee demanded by the European Commission for UK defense firms to access an enhanced share of the loans. While Britain acknowledged the necessity of contributing financially, officials maintained they would not accept an agreement at any cost. This stalemate effectively limits UK-based companies to providing no more than 35% of the total value of any finished defense products funded through the scheme.
Nick Thomas-Symonds, Minister for EU Relations, expressed disappointment that discussions couldn’t be concluded before the first bidding round. ‘Our negotiators engaged in good faith throughout,’ he stated, ‘but our position remained clear: we will only sign agreements serving national interests and delivering value for money.’
The European Commission indicated potential for future negotiations, with a spokesperson noting that while no agreement could be reached ‘at this time,’ constructive dialogue had occurred. Meanwhile, nineteen EU nations have already applied for funding from the program, with Poland securing the largest allocation at €43.7 billion.
Industry representatives from ADS, Britain’s defense trade organization, characterized the development as a ‘frustrating setback’ for UK defense contractors. Chief Executive Kevin Craven maintained optimism that arrangements might be salvaged in the coming year.
This negotiation failure occurs against the broader backdrop of ongoing UK-EU discussions aimed at resetting post-Brexit relations, including potential agreements on reducing border checks for food products and linking carbon trading systems. Separate talks with Canada regarding its participation in the SAFE program were also underway, with Brussels hoping to finalize an agreement before the weekend deadline.