A key part of Sir Keir Starmer’s Brexit reset appeared to be unravelling on Wednesday as the Defence Secretary said the UK was willing to quit talks on a defence deal.
John Healey appeared downbeat about the chances of Britain joining the EU’s Security Action for Europe (Safe) €150bn (£132bn) rearmament fund, telling The i Paper the UK was not willing to sign up for “any price”.
The scheme is intended to use low-interest loans to boost Europe’s arms production capacity and reduce reliance on US supplies in response to the growing threat from Russia and Donald Trump’s withdrawal from the continent.
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Healey’s remarks came as Politico revealed that the two sides are far apart as negotiations approach the 30 November deadline. The EU is demanding between €4bn and €6.5bn (£3.5bn to £5.7bn) for Britain to “pay to play”, but the UK Government is only offering €200m to €300m (£176m to £265m) to cover administration costs and guarantees for loans under the scheme.
Healey pointed out that European Commission president Ursula von der Leyen in May said a deal could be done on Safe “within weeks” after the two sides signed a security and defence pact that was the centrepiece of the Prime Minister’s UK-EU summit.
Instead, the Defence Secretary said the EU had waited for weeks in negotiations to reveal its proposals “in some important areas”, suggesting the demands for billions of pounds of cash had been sprung at the last minute.
Healey made clear the UK was willing to walk away from the talks, as The i Paper reported last week, and suggested British defence firms could instead do weapons-buying deals with European counterparts over Brussels’ heads and outside the Safe framework.
At a Downing Street press conference, Healey told The i Paper: “My message to the EU is what it’s always been, we want a deal.
“Back in May, President von der Leyen talked about a deal within weeks on Safe and we’ve been negotiating at each stage, ready for a deal, but also clear – clear that we’re ready to pay a contribution to the costs of running the scheme, that’s fair, ready to pay if there is good value for money for our taxpayers and our industry.
“We’ve waited weeks within the negotiations for the chance to see the European proposals in some important areas.
“For us, we’re ready to be part of this scheme, but we’re not ready to be willing at any price.
“And for us as the UK, we have an industry that’s second to none in Europe.
“We will do these deals with other European countries.
“We will play our part in reinforcing European security, and we recognise that responsibility we have as Britain, amongst European nations, particularly those in Nato, to play that role in future, and we will, in or out of Safe.”
The scheme is also seen as crucial to boosting the UK’s manufacturing productivity as No 10 tries to boost the economy.
The EU’s initial offer is understood to include a demand of up to €6.5bn (£5.7bn) for British defence firms to bid for contracts worth up to 50 per cent of the Brussels rearmament scheme, but the UK is offering much less.
EU insiders last week believed Britain would eventually concede amid claims that UK defence firms have already lined up bids for loans with European counterparts, ready to submit on 30 November, creating pressure on the Government not to cut them out.
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But, Healey’s public comments suggest the UK is frustrated with the EU’s demands.
David Henig, UK director of the European Centre for International Political Economy (ECIPE), said Safe talks were “struggling” and that while some of the disagreements could be negotiating “theatre” designed to sell compromises to domestic audiences, there are “some genuine problems, particularly in Brussels”.
He suggested the EU was wrangling with questions over “how to treat partners, dealing with the US and China, the budget, France-Germany relations – basically strategic uncertainty”.