Labour Nears Historic Defence Deal with EU as British Industry Gains Access to 150 Billion Euro Fund

Sir Keir Starmer is on the brink of securing a landmark trade agreement with the European Union, potentially opening doors for British arms manufacturers to access a €150 billion European defence fund. The deal represents a significant shift in post-Brexit relations, though it comes with notable concessions in fishing rights.

The forthcoming arrangement would enable British defence giants such as BAE Systems and Babcock to bid for contracts under the Security Action for Europe (Safe) initiative. This development marks a substantial departure from previous restrictions that excluded British firms while allowing participation from non-EU nations including Norway, Moldova, and South Korea.

British negotiators have demonstrated flexibility on fishing quotas, a key French demand linking maritime access to defence cooperation. The proposed multi-year fishing agreement would maintain current European access levels rather than implementing further reductions, diverging from the annual negotiations model used with Norway.

Economic analysis supports the strategic value of this trade-off, with British defence exports reaching £14.5 billion in 2023, dwarfing the fishing industry’s £1.7 billion in sales. The Labour government’s pragmatic approach includes accepting dynamic alignment with EU regulations on food standards and emissions trading, aimed at reducing port checks and enhancing trade efficiency.

The agreement coincides with a separate £30 million drone procurement deal with New Zealand-based Syos Aerospace, highlighting Labour’s commitment to diversifying defence partnerships. The prime minister is scheduled to host an EU-UK summit in London on May 19, where these arrangements are expected to be formalised.

Rachel Reeves, the Chancellor, emphasised the government’s measured approach to international trade, stating that stability and fairness remain primary objectives in an increasingly complex global economy. The Treasury’s focus continues to be on securing advantageous terms while maintaining strategic partnerships.