The UK had sought participation in the €140–150 billion Security Action for Europe (SAFE) rearmament mechanism, intended to fund low-interest defense production loans and reduce reliance on U.S. supply chains.

But the dispute over contributions widened in the final days before the end-of-November deadline, leaving both sides publicly firm on cost and value considerations.

Fee Dispute Halts Negotiations

EU representatives requested contributions ranging from €2 billion to as high as £5.7 billion, while London’s formal offer remained below £1 billion for administrative and loan-guarantee costs.

A separate filing shows the UK tabled an €82 million proposal plus limited additional fees, which was rejected as insufficient. Officials on both sides said positions remained “far apart” as the deadline expired.

SAFE Access Still Possible Under Limited Terms

Under existing rules, UK defense firms can still access up to 35% of eligible spending on a third-country basis, and that could rise to 50% should full membership be agreed later.

The European Commission indicated that talks could resume in the coming months, stressing that funding commitments were not yet due under the programme’s schedule.

London Says Value For Money Not Met

UK ministers said any agreement must be “in the national interest” and deliver clear value, arguing that the EU’s demands exceeded the benefits of joining the first SAFE round.

Officials noted that the UK has already signed multiple bilateral defense agreements across Europe and intends to remain a contributor to continental security “in or out” of the scheme.

Political Stakes For Security Reset

The impasse represents a setback for efforts to reset political relations after years of Brexit-related friction. Senior officials had hoped that quiet diplomacy in the lead-up to the G20 summit could secure a deal, but the final round of talks confirmed that neither side was willing to exceed its financial ceiling.

UK sources maintain that cooperation on food, energy and other sectoral agreements continues unaffected.