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French officials have proposed a plan to limit the use of British-made military equipment in the European Union's €150bn security fund, a move that could hinder negotiations over the UK’s involvement in the initiative.

Suggested 50% Cap on UK Input

Per officials, French representatives has proposed a 50% ceiling on the value of British components in initiatives financed through the European Union’s SAFE fund.

This €150 billion loans scheme is a component of the bloc’s broader effort to boost defence spending and reinforce European defense resources.

British-European Security Partnership

In May, British leader Keir Starmer and EU chief the Commission’s head signed a landmark security and defence partnership, enabling increased UK involvement in European defence initiatives.

Absent this agreement, the UK would have been limited to providing no more than 35% of the content of components in any SAFE-funded project.

Current Negotiations and Potential Challenges

Yet, the UK must still negotiate a detailed arrangement to obtain a larger role for its military industry, and the European Union could set additional limits on British participation.

In addition, the UK government needs to negotiate a cost to participate in the program.

These suggested limits on UK inputs were raised during internal meetings as EU member states draft a negotiating mandate for the EU executive before talks with the British government.

EU Country Responses

A large majority of member states reportedly oppose restrictions on UK involvement, favoring leeway in military acquisitions.

One European official labeled the suggested fifty percent cap as a “typical Paris obsession.”

Paris has consistently championed a European defence industry that is autonomous from the United States, and has contended that since leaving the EU, the UK should not benefit from the bloc’s internal market advantages.

UK Objectives and Benefits

The UK does not intend to request loans from the program—which are earmarked for EU member states—but hopes that British military firms will benefit from the investment surge.

A formal deal to enter SAFE would make it easier for UK firms to take part in military production networks, providing equipment ranging from unmanned aerial vehicles and ammunition to advanced artillery systems with long-range capabilities.

Formal Statements

“We support the European Commission in its work to establish the terms for the UK’s participation with the program. Foundation for this is provided by the SAFE regulation, which stipulate that some of components must come from the European industry.”

— Representative, France’s Diplomatic Mission

“Britain is an essential partner for the European Union. Have many shared interests, hence our will to conclude a mutually beneficial agreement to fully integrate them with our defence instrument.”

— Thomas Regnier, European Commission

Next Steps

The UK must also negotiate a membership cost to enter the scheme, which is designed to cover administrative expenses.

EU officials are scheduled to discuss UK entry to SAFE this coming days, along with a parallel arrangement for Canada, which recently signed its own defence agreement with the EU.

Latest Involved Countries

EU authorities announced that nineteen member states will receive SAFE loans.

• Poland is receiving the largest amount of €43.7 billion.
• The French state and the Hungarian administration will each obtain €16.2bn.
• Romania is set to access €16.7 billion.
• The Italian government will take €14.9 billion.

The EU-backed funds reduce borrowing costs for many member states and can be used for equipping national armies or aiding Ukrainian defense efforts.