The SAFE scheme, a €150 billion package of low-interest loans intended to turbocharge Europe’s defence spending, had been pitched as a cornerstone of renewed UK-EU security cooperation, especially in light of rising threats from Russia and weakening US engagement in Europe.

But negotiations broke down after Brussels reportedly demanded an entry fee of up to €6.5 billion for UK participation, far beyond what London was prepared to commit. As a compromise, the EU had floated capping the proportion of UK-produced components in funded projects, even as low as 50%. Under those “third-country” terms, UK defence firms would be restricted to supplying no more than 35% of any contract, a limit London found unacceptable.

Yahoo Finance reports that, as a result, the UK announced it could not reach an agreement by the looming 30 November deadline. While British firms may still take part in SAFE projects as third-country contractors, the terms are far less favourable, dashing hopes of wide-scale participation.

The collapse not only deprives UK defence companies of potentially large contracts but also deals a reputational blow to Starmer’s “reset” strategy. What had been presented as a symbolic signal of renewed trust between London and Brussels now looks like another post-Brexit rift.

For Brussels, the failure highlights how hard it remains to bridge divergent priorities over cost, access and control, even amidst a common drive to rearm Europe. And for London, the defection from SAFE marks a stark reminder: post-Brexit rapprochement has limits.