France has proposed a ceiling on the value of British-made components used in projects financed by the European Union’s €150bn Security Action for Europe (SAFE) loans instrument, ahead of negotiations on the United Kingdom’s association to the scheme.
Paris has informally floated a 50% cap on UK inputs, according to multiple diplomatic briefings reported today, a move that would shape supply-chain decisions for companies bidding into EU-funded defence programmes.
SAFE is the EU’s new defence-loans facility intended to accelerate procurement and rearmament across the bloc. The Commission finalised allocations last week, with 19 member states opting to draw on the facility. Poland will take the largest share, €43.7bn, with sizeable allocations also for Romania, France, Hungary and Italy. Disbursements are intended to start in 2026 following member-state investment plans due later this autumn.
The UK is not eligible for SAFE loans, which are reserved for EU states, but London is seeking to associate to the instrument so that British industry can participate more fully in projects financed by it. That follows the EU–UK Security and Defence Partnership signed on 19 May 2025, which set the political basis for closer cooperation on defence industrial policy, military mobility, space, cyber and counter-hybrid threats.
Officials in Brussels and London now need to agree a technical arrangement defining the terms for UK participation, including any limits on third-country content and an associated fee. Separate reporting today indicates the financial contribution remains a central sticking point, with the UK seeking a cost–benefit balance that would justify access for its companies to EU-funded procurements.
Under the current framework, absent a specific association deal, UK firms would be capped at supplying up to 35% of the value of components to any SAFE-funded procurement. The May partnership opened the door to a deeper arrangement, but member states must first mandate the European Commission to negotiate, and that mandate could include conditions such as a component ceiling. A Commission spokesperson has previously signalled an intention to reach a “win–win” association with the UK while underscoring that SAFE contains “buy European” provisions.
Diplomatic sentiment across the EU appears mixed on the French proposal. While several capitals favour maximum flexibility to source best-value kit across allied supply chains, Paris has long advocated building a more autonomous European defence industrial base and has argued that post-Brexit the UK should not benefit from single-market instruments without conditions. The immediate question for member states is whether to include a numerical cap in the negotiating mandate or to allow case-by-case discretion linked to the UK’s contribution.
For industry, the parameters matter. A 50% cap would still permit substantial British participation in joint projects—across munitions, drones, infantry weapons and artillery systems—but could constrain bids where UK content would otherwise dominate a subsystem or platform. Prime contractors and tier-one suppliers in the EU may need to rebalance workshares to remain compliant, while UK firms would weigh the certainty of access against the level of the UK’s association fee. The timing is tight: member states must file their SAFE investment plans by late November 2025 for the first wave of approvals, creating pressure to clarify third-country participation rules.
The proposed ceiling also intersects with broader transatlantic procurement dynamics. France’s position reflects a long-standing policy preference to reduce reliance on non-EU suppliers where feasible, while many other member states emphasise urgency, cost and interoperability—particularly in the context of support to Ukraine and replenishment of stocks. An association agreement with the UK that balances industrial policy with operational needs would signal whether SAFE is primarily a vehicle for EU industrial consolidation or a flexible tool to unlock rapid, multi-national production across closely allied economies.
Next steps rest with the Council. Ambassadors are due to consider the Commission’s draft mandate for talks with London (and a parallel text for Canada) before formal negotiations begin. Should member states reach unanimity on the mandate and the UK accept the financial and regulatory terms, an association could be in place in time for UK-linked consortia to participate in early procurements; if not, British industry may face a more limited role under the baseline third-country cap. The Commission continues to describe the UK as an “essential partner”, but the scope of that partnership under SAFE will be set by the mandate now taking shape.
