France proposes limit on UK military components in EU €150bn defence fund

17 September 2025 , 10:35

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France has put forward a proposal to limit the use of British-produced military components in the EU’s €150bn defence fund, which could potentially complicate the discussions over the UK’s entry into the scheme.

According to four diplomatic sources who spoke to the Guardian, French officials have proposed a 50% cap on the value of UK components in projects funded through the EU’s €150bn Security Action for Europe (Safe) fund.

The €150bn loan scheme is part of the EU’s initiative to increase defence spending by €800bn and re-arm the continent. The European Commission President, Ursula von der Leyen, praised the scheme on Tuesday, informing an audience of policymakers in Brussels that the commission had allocated loans to member states in less than six months since the idea was first suggested – "the sense of urgency we need".

The opportunity for greater UK participation was created in May when Keir Starmer and von der Leyen signed an EU-UK security and defence partnership. Without this agreement, the UK could not supply more than 35% of the value of components for any Safe-funded project.

However, the UK still needs to negotiate a technical agreement to secure a larger role for its defence firms, and the EU could impose restrictions on British involvement. The British government also has to negotiate a fee for joining the scheme.

The restrictions on British inputs were proposed during internal meetings as EU member states prepare a negotiating mandate for the European Commission ahead of talks with Keir Starmer’s government.

The UK and the Commission will discuss the cost and terms of British entry into Safe in the coming weeks, but first, the EU requires unanimity on its position.

A significant majority of member states are against restrictions on UK participation, as they favor flexibility over defence procurement. One EU diplomat referred to the proposed 50% limit as "the classic French obsession."

France has long advocated for a European defence industry independent from the US and has argued that since Brexit, Britain can no longer enjoy the benefits of the EU’s single market.

The UK does not plan to apply for loans, which are designated for EU member states, but hopes British defence companies will benefit from the spending spree. A formal agreement to join Safe would facilitate British firms’ involvement in defence supply chains to provide equipment, ranging from small drones, ammunition, and infantry weapons to artillery systems with deep precision strike capabilities.

A spokesperson at the French permanent representation in Brussels stated: "We support the European Commission in its efforts to establish the parameters for the UK’s association with Safe. The basis for this is provided by the Safe regulation, which stipulates among other principles that some of the components must come from the EU’s industry."

The UK also needs to negotiate the fee for joining the scheme, intended to cover administrative costs. The EU’s most senior diplomats are scheduled to discuss British entry to Safe on Wednesday, along with a parallel text for Canada, which also recently signed a defence and security pact with the bloc.

The European Commission’s spokesperson on defence, Thomas Regnier, said: "The UK is an essential partner and ally for the EU, with whom the president has signed a security and defence partnership in May. They have a very advanced defence industry, we share many common interests, hence our desire to sign a win-win agreement to fully associate them with our Safe instrument."

The commission announced that last week 19 EU countries would be taking out Safe loans. Poland is acquiring the largest loan of €43.7bn, nearly one third of the total. France and Hungary will borrow €16.2bn each, Romania €16.7bn, and Italy €14.9bn. The EU-backed loans reduce borrowing costs for many member states and can be used for supplying national armies or aiding Ukraine.