FTI Consulting Public Affairs Snapshot: Did the UK-EU Summit deliver for defence?

Context

The promise of a Brexit reset was at the heart of the election campaign that swept Labour to power in the UK in July 2024. Ever since, Prime Minister Sir Keir Starmer has made clear his desire to seek warmer relations with the EU and end the divisions, divergence and indifference that in his view were the hallmark of the previous government, not least in terms of the UK’s defence and security relationship with the EU.

The years since the UK’s formal exit from the EU in 2020 have only made this more evident. In the face of a deteriorating European threat picture, and new challenges to the Euro-Atlantic alliance, the EU has been rapidly expanding its defence industrial ambitions in a process termed ‘Strategic Autonomy.’ More than just rhetoric, this has focused on defence research & development (R&D), including through the Permanent Structured Cooperation (PESCO) framework and €7.3 billion European Defence Fund (EDF), and more recently has shifted into mass capability recovery and increased production of military equipment such as the Act in Support of Ammunition Production (ASAP) and European Defence Industry Reinforcement through common Procurement Act (EDIRPA).

The publication of the European Defence Industrial Strategy (EDIS) and its associated European Defence Industry Programme (EDIP) in March 2024 made clear the scale of Brussels’ ambitions for the future of the bloc’s defence industrial production. With an aggressive and unpredictable Russia threatening to extend its invasion of Ukraine to encroach upon EU territory and interests, combined with new question marks over the reliability of the US as an ally of last resort, this stark reality is being met by a unified EU response.

The EU has now put its money where its mouth is, mobilising a potential €800 billion worth of defence spending by Member States through its ReArm Europe Plan/Readiness 2030. €150 billion of this would be made up of EU-backed loans via the Security Action for Europe (SAFE) instrument.

However, the EU’s defence initiatives and broader strategic direction to date has left limited opportunities for meaningful defence industrial cooperation between the EU and the UK, now but a third party like any other since Brexit’s implementation.

It was welcome then that the Labour Party, confident in its all but inevitable victory at the subsequent July 2024 General Election, laid out at the start of 2024 its desire to seek rapprochement with the EU on defence and security with a bespoke ‘UK-EU Security Pact.’

Though Labour did not specify if any defence industrial cooperation provisions would be included in its pact, the intent to establish greater strategic dialogue and mechanisms for collaboration across a range of security matters left industry hopeful that the following year could garner such results.

Yet, as Labour had made clear its intention to seek a wider reset with the EU, defence and security considerations were always likely to be but one part, or contingent upon, such an approach.

This was not surprising.

With economic growth an absolute imperative of the UK Government in a less than favourable fiscal climate, the Prime Minister and his Chancellor, Rachel Reeves, have been keen to ease barriers with the UK’s largest trading partner wherever it can. London has also sought to navigate the tightrope between fostering closer relations with Brussels whilst keeping its recently revitalised special relationship with Trump on course, positioning itself as a Euro-Atlantic bridge.

For its part, the EU, to some extent, can take advantage of the closer collaboration among European countries to satisfy Washington, which sees all its Allies on the Old Continent going hand-in-hand with the demand to regain military muscle until they can take charge of their own security, thus allowing the US to focus on the Indo-Pacific.

Taken together with an increasingly deteriorating global geopolitical picture, not least the persistent need to support Ukraine, and isolationist administration in Washington enacting a spat of trade wars, including most vociferously with the EU itself, both parties acknowledged that there could be benefits – diplomatic and economic – from a general reset.

A view from the UK

For a Summit that had been earmarked to have a strong focus on defence and security, it is perhaps ironic that the defence industry has received little of substance from it – at least so far.

While the promise of doors being opened to future agreements on specific capability cooperation has been welcomed by industry chiefs, privately there will be concern that action infrequently lives up to rhetoric.

What in its original form had the potential for UK industry to benefit from a plethora of EU defence initiatives, such as collaborative industrial programmes under PESCO, the EDF, EDIP and SAFE, has instead only delivered commitments in principle to negotiate limited future access to just one of them (SAFE) on what is certain to be a ‘pay-to-play’ basis.

Yet even this was hard won. Over the weekend it was widely reported that the UK’s participation in SAFE had become contingent on reciprocal concessions regarding access to UK fishing waters. That the final agreement on this politically contentious issue was more accommodating of EU demands than had been expected can be read as evidence for the determination of the UK to get the defence and security deal done – that in itself may provide some reassurance that the UK Government will be eager to help industry realise the opportunities therein.

But EU Member States remain split on how far UK access to the EU defence market should extend, with France seemingly victorious in its bid to limit non-EU countries involvement in SAFE contracts to just 15 per cent (rather than the 35 per cent threshold proposed by more cautious Member States). Nothing in the deal concluded this week guarantees the UK any exemption from this. Big questions thus remain over how much commercial benefit UK industry can expect from the fund, especially given a clause urging Member States to replace non-EU capability with equipment sourced from within the bloc remains in place.

Moreover, though SAFE has been agreed at the institutional level in the EU, it remains unclear how and to what extent it will interface in practice with existing EU defence initiatives – all of which the UK remains un-associated to – and what conditions will be applied to rules governing the domiciling of design authority and intellectual property, all of which could result in indirect blockers to UK involvement, inadvertent or otherwise.

There is some solace, however, in the desire by both parties to establish a formal, direct framework for dialogue on defence industrial issues, something that has long been argued for by industry as the basis through which further cooperation could be explored. It is also true that, under the current Government, any allergic reaction to perceived ‘European encroachment’ is far less likely.

Provided that a UK capability requirement has been articulated and the associated funding attached, industry can hope to make progress on specific collaborative programme opportunities. With the Government focused on economic growth and seeking to occupy the increasing void being left by the US in Europe, Starmer has made a bet that any short-term political furore about a Brexit betrayal will be a price worth paying in exchange for the benefits, economic as well as security-focused, that this agreement will drive.

In that context, the lack of concrete provisions for UK-EU defence industrial cooperation and limited exploration of the potential for UK involvement in other EU defence initiatives is at least an opportunity for tomorrow. Yet, given what it might have been, UK industry will be weary of looking back on an opportunity missed.

A view from Brussels

Defence Readiness 2030 opened the door for the EU to turbocharge ties with the UK, capitalising on Brexit’s untapped potential. A Security and Defence Partnership sets the stage for deeper collaboration, aligning with the EU’s global outreach, as seen in recent agreements with Japan and South Korea. The UK’s proximity across the Channel and its Transatlantic leverage makes this partnership uniquely strategic.

This agreement also paves the way for concrete benefits. The clearest of all, the UK’s participation in the SAFE instrument as part of the measures to be implemented under ReArm Europe. Nonetheless, one shall keep in mind that it sets voluntary measures for the Member States, but they remain in the driving seat. Hence, it is up to individual Member States to decide whether to make use of them.

Thus, while 16 out of 27 EU Member States have so far decided to activate the national escape clause of the Stability and Growth Pact to create more fiscal space to invest in defence, it remains to be seen how many Member States will buy-in to SAFE. The extent of UK involvement—and benefits for its industries—depends on how many EU states engage with SAFE and which partnerships emerge. Some nations and their industries will likely be more proactive in pursuing these opportunities.

Moreover, a strengthened defence industrial relationship grants the EU access to cutting-edge technologies, including unmanned aerial systems honed in Ukraine, where the UK has been active.  It would also boost synergies with UK industry but also with the US and explore the possibility of using some of the UK’s facilities for joint production. The fact that the agreement provides for cooperation on disruptive technologies (such as artificial intelligence), cybersecurity and hybrid threats allows the EU to benefit from UK developments and approaches, enhancing its resilience to current and future challenges. Needless to say, there is a positive effect for European companies with a footprint in both the UK and the EU.

On top of this, collaboration within NATO is critical, but risks bypassing EU-UK frameworks as bi- or multilateral agreements gain traction. The March 2025 E5 meeting in Paris—where France, the UK, Germany, and Poland committed to enhancing Europe’s support for Ukraine and increase European contribution to deterrence and defence in Europe —signals this trend.

Key steps going forward would include securing the UK’s participation in PESCO’s Military Mobility project, alongside the US, Canada, Norway, and soon Switzerland, and forging an agreement with the European Defence Agency (EDA). For these to succeed, ongoing efforts to resolve Brexit-related tensions with affected Member States are essential.

By acting decisively, the EU and UK can build a robust, mutually beneficial defence partnership, ready to tackle current and future challenges, enhance regional security, foster innovation, and drive economic growth for both sides.