Britain said on Friday that talks to join the European Union's SAFE defense fund had collapsed, a setback for a much-touted post-Brexit reset of relations aimed at strengthening Europe's defense, UNN reports with reference to Reuters.
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Prime Minister Keir Starmer in May hailed a "new era" in Britain's relations with the EU, reaching an agreement to reset defense and trade ties that allowed London to negotiate joining the 150 billion euro ($173 billion) fund to rearm Europe.
But two days before the deadline for concluding the talks, Britain said it would not be possible to reach an agreement.
"While it is disappointing that we have not been able to conclude negotiations on UK participation in the first round of SAFE, the UK defense industry will still be able to participate in projects through SAFE on third country terms," said Nick Thomas-Symonds, UK Minister for the European Union.
"The negotiations were conducted in good faith, but our position has always been clear: we will only sign agreements that are in the national interest and provide good value," he said.
Shares of Britain's largest listed defense companies – BAE Systems, Rolls-Royce and Babcock – were unaffected by the news.
Under the terms of the fund, procurement contracts must ensure that no more than 35% of component costs originate from outside the EU or from other participating countries, such as Ukraine.
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Negotiators discussed whether Britain's participation could be limited to 50%, but Britain rejected EU demands for billions of euros in contributions for access.
A European Commission spokesman declined to comment on the outcome of the talks, saying they had been intense but conducted constructively and in good faith.
"If an agreement cannot be reached at this point, let's not forget that SAFE is inherently open," the spokesman said, noting that Britain could participate up to the 35% limit.
"We, of course, remain fully committed to implementing our ambitious UK-EU security and defense partnership," he said.