EU and UK fail to reach agreement on European defense funding
Europe’s attempt to build a unified defense-industrial framework has faltered, as the UK remains excluded from the EU’s new €150B SAF-E funding instrument — underscoring ongoing fragmentation in European strategic cooperation.
Brussels and London have hit a wall. The British defense industry will remain outside SAF-E — Europe’s new defense investment instrument — after negotiations collapsed over participation terms and funding access. The setback exposes persistent fractures in European strategic coordination despite public political messaging suggesting a “reset” in relations post-Brexit.
The summit optimism of May 19, when UK Prime Minister Keir Starmer met with Ursula von der Leyen and Antonio Costa, has evaporated. Six months later, both sides formally acknowledged failure to secure an agreement enabling British industry to participate in SAF-E (“Security Action for Europe”).
SAF-E represents a €150B financing mechanism raised by the European Commission across roughly 20 participating states, including France, Poland, Greece, and others. The program explicitly prioritizes “Made in Europe” procurement — a phrase that proved central to the impasse. London pushed for equal access for British firms on the basis of interoperability, contribution to NATO capabilities, and shared security stakes. Brussels held firm: access requires membership in the EU’s regulatory and industrial defense ecosystem — and the UK is not inside.
The timing is problematic. Europe is attempting to elevate defense production capacity, deepen continental supply chains, sustain matériel flows to Ukraine, and preempt strategic dependence on external suppliers — including, increasingly, the United States. The disagreement weakens the perception of a unified European defense posture at a moment when American political uncertainty leaves Europe guessing how long US support for Ukraine will hold at current levels.
Industry consequences are real. British firms like BAE Systems, Rolls-Royce Defense, Thales UK, and Qinetiq are now sidelined from direct SAF-E tenders, while EU companies benefit from quasi-exclusive access to the new capital pool. British participation may now only occur indirectly — via subcontracting or via EU subsidiaries — introducing inefficiency and strategic ambiguity.
Diplomatically, both sides issued restrained statements describing the failure as “regrettable,” but neither projected urgency for reopening talks. In practice, this entrenches a dual-track trajectory: the EU is building its defense-industrial identity — protectionist by design — while Britain reframes its defense strategy through NATO channels, AUKUS cooperation, and bilateral defense relationships outside the EU perimeter.
Each side believes it is acting in its best interest. But the net result is clear: Europe still lacks a fully integrated, continent-wide defense industrial base — and time is not working in Europe’s favor.
