The UK is preparing to initiate discussions regarding the participation of British companies in military projects funded by EU defense loans. The European Commission plans to make available billions of pounds in loans to EU member states to facilitate joint weapon purchases.
UK ministers are aiming to finalize an agreement in the coming weeks that would allow UK-based firms to engage in contracts financed by these loans. Any deal would likely establish limitations on the extent of British firms’ contributions to projects, alongside a proposed entry fee imposed by the EU for participation.
This initiative is part of the Security Action for Europe (SAFE) scheme, which was announced in March as a response to increased defense needs following Russia’s invasion of Ukraine. The European Commission intends to borrow up to €150 billion (£130 billion) to provide long-duration loans that support projects involving at least two EU countries, aiming to enhance overall defense spending. These loans would cover the procurement of various military equipment, including ammunition and missile defense systems.
Although the UK cannot directly apply for these loans, a defense agreement reached with the EU earlier this year enables British defense companies to contribute to projects funded by the SAFE initiative. Officials are now expected to discuss the specifics of UK participation, as EU ministers have recently authorized the negotiations.
Key points for discussion include the entry fee for the UK and the potential for increasing the cap on how much British firms can provide, which is currently set at 35% of a complete defense product’s value. France has reportedly expressed interest in limiting the benefits that non-EU companies can receive from these loans.
UK Defence Secretary John Healey has indicated the UK’s readiness to contribute financially to access this scheme, while emphasizing the importance of maintaining a role in program decisions and protecting UK intellectual property rights. Nick Thomas-Symonds, the minister for EU relations, has expressed a desire for a timely agreement to allow British participation in initial bidding rounds, with application deadlines approaching in November. So far, 19 of the 27 EU countries have submitted requests for these loans, which are expected to be disbursed in early 2024, with Poland receiving the largest allocation of €43.7 billion.
Source: https://www.bbc.com/news/articles/c07vdy4yz9do?at_medium=RSS&at_campaign=rss