The 27 EU nations have yet to agree a mandate for taking forward the next stage of talks, with governments divided over how much they should cooperate with external allies on procurement.
Anne Fort, deputy head of cabinet for defense at the European Commission, told a defense conference in London Friday: “If we want the industry to be part of SAFE … we will also have to define a financial contribution that the U.K. will have to make.”
The U.K. will also need to say whether it wants both big companies and smaller suppliers to be allowed to take part, she said.
A second senior EU defense official confirmed that discussions would now center on the U.K.’s level of contributions to the SAFE budget, and a 35 percent cap applied to components produced outside the EU.
In a more favorable outcome for London, the 35 percent limit could be varied in order to make it more attractive to participate in the program. If the EU takes a tougher line, the U.K. would not only have to accept the cap on parts, but its participation could be limited to project-specific borrowing.
One diplomat from an EU country was adamant the fund should not be used by London to strengthen only U.K. companies, meaning that a way must be found for U.K. bids to help strengthen EU firms, as the deal should work both ways.