Talks on UK access to an EU defense fund have broken down

LONDON (AP) – Talks on the U.K. joining a major European Union defense fund have ended without agreement, the British government said Friday, in a blow to its post-Brexit reset with the 27-nation bloc.

Prime Minister Keir Starmer, elected last year, pledged to repair ties with the EU strained by Britain’s acrimonious departure in 2020. In May, the U.K. and the EU announced new agreements on trade, travel and defense that Starmer hailed as a “win-win.”

The plan was for the U.K. defense industry to access a 150 billion euro ($170 billion) EU loan program, known as Security Action for Europe, or SAFE, set up to help Ukraine and the rest of Europe defend itself. That would allow British firms to secure cheap EU-backed loans to procure military equipment.

But negotiations foundered over money, with Europe demanding more for Britain’s participation than the U.K. was willing to pay.

British EU Relations Minister Nick Thomas-Symonds said Friday that the “negotiations were carried out in good faith, but our position was always clear: we will only sign agreements that are in the national interest and provide value for money.

“While it is disappointing that we have not been able to conclude discussions on U.K. participation in the first round of SAFE, the U.K. defense industry will still be able to participate in projects through SAFE on third country terms,” he said.

Third countries can participate in SAFE projects up to a maximum of 35% of the value of a contract, but Britain had been trying to negotiate a higher threshold.

Thomas-Symonds said the two sides “continue to make strong progress” on other parts of the May agreement, including energy and trade in food and drink.

EU spokesperson Thomas Regnier said the bloc remains “fully committed to delivering our ambitious U.K.- EU security and defense partnership.

“If an agreement could not be found at this point in time, let’s not forget that SAFE is open by design,” he said. “The U.K. can by default participate in SAFE up to 35%.”