By Sudip Kar-Gupta PARIS, March 24 (Reuters) - EU Council President Antonio Costa said on Tuesday he was confident Britain and the European Union would reach a deal on UK participation in the bloc’s
Costa says UK and EU on course for deal on SAFE defence fund
Progress and Prospects for UK Participation in the EU SAFE Defence Fund
By Sudip Kar-Gupta
Background of the SAFE Defence Fund Negotiations
PARIS, March 24 (Reuters) - EU Council President Antonio Costa said on Tuesday he was confident Britain and the European Union would reach a deal on UK participation in the bloc's multi‑billion‑euro SAFE defence fund, despite talks over the issue breaking down in November.
Initial Setbacks in UK-EU SAFE Fund Talks
A British plan to join the original 150 billion euro ($174 billion) SAFE fund fell through after the government of Labour Prime Minister Keir Starmer refused to pay a financial contribution to join.
Renewed Optimism for a Deal
However, Costa pointed to warmer ties between Britain and the EU, with Starmer consistently pushing for a post-Brexit "reset" with the bloc as grounds for hope of a deal.
Joint UK-French Leadership in European Defence
He also highlighted how Britain and France were jointly leading Ukraine's "Coalition of the Willing" as a reason why he believed a deal would be reached.
"The new Labour government has started the reset, and the reset is going well," Costa said in a speech at Paris' Sciences Po university.
"It could take some weeks, months, but for sure, we will achieve an agreement with the UK on the SAFE issue," he said.
Future Prospects and Industry Implications
Potential for UK Involvement in a Second SAFE Fund
Last month, Starmer said his government would consider applying to join a second possible EU SAFE fund. Under the initiative, the EU jointly borrowed money on financial markets to lend to countries in the bloc for defence.
UK Government and Industry Response
Asked about Costa's remarks, a British government source said the UK would only sign agreements that were in its national interest, and noted that British firms remained a vital part of defence supply chains across Europe.
The source said the UK's defence industry continued to have access to SAFE under standard third-country terms, which allow British companies to participate in SAFE-funded arrangements for up to 35% of a project's value.
Financial Context and Reporting
($1 = 0.8630 euros)
(Reporting by Sudip Kar-Gupta and Sam Tabahriti in London;Editing by William Maclean)
