The UK could benefit more from a €90bn (£78bn) EU loan Ukraineif European countries agree to help pay the cost of borrowing, after signing a long-awaited bailout for Kyiv.
If the government agrees to a “fair” contribution towards the costs of EU borrowing, British firms will have more opportunities to supply defense equipment to Ukraine through the loan.
A meeting of senior EU diplomats on Wednesday approved a long-awaited loan for Ukraine, including a new element of a more open door towards the UK.
According to three diplomatic sources, the UK clause, including British financial support, was approved by Monday. However, EU member states will have to negotiate further on how to include the UK, including agreeing a list of products that can be sourced from British suppliers.
The decision came after signals from UK Prime Minister Keir Starmer He wants to reopen negotiations with the EU On defense agreement. Negotiations to join the EU’s €150bn Security Action for Europe (SAFE) programme It collapsed last year.
As the current safeguard scheme progresses without the UK, a loan for Kyiv would provide a more immediate way for the EU and the UK to find harmony on defence.
This debt is a vital lifeline for Ukraine Months of brutal Russian attacks have crippled its power and heating systemsleaving people in the cold and darkness, while the country is in the grip of a bitterly cold winter.
EU leaders agreed last year to lend Ukraine a loan to fill a critical funding gap in 2026 and 2027, as Kyiv risks running out of money to fund its defense, pay public servants and pensions.
The debt is financed by borrowing on the capital markets secured against unused expenditure in the EU budget. EU leaders have balked at the solution, disagreeing on the alternative to borrowing Assets frozen by Russia.
According to the plan, €60bn is earmarked for Ukraine’s defense and €30bn for general budget support.
The EU said Ukraine would have to buy military equipment from domestic suppliers, the EU or closely allied countries such as Norway. But if critical kit is not available in those countries, Kyiv is safe Permission from Brussels to buy from other countries including the US
The intention is to ensure European priority, but also to give Kyiv the flexibility to buy, for example, US Patriot missile defense systems.
An updated version of the proposal approved on Wednesday introduced two new provisions aimed at giving Kyiv greater flexibility to buy from non-EU countries that have signed security deals with the union.
One provision is aimed at the UK. “Ukraine is allowed to purchase military equipment from a country committed to making a fair and proportionate financial contribution to the costs arising from it. [EU] Borrowing” is commensurate with the value of the contracts won. In addition, the country must have a security and defense partnership with the EU and be able to demonstrate that it provides “substantial financial and military assistance” to Ukraine.
As part of the reset, the UK and EU signed the Security and Defense Partnership last May.
An EU diplomat told the Guardian that it would make sense to allow Ukraine to buy weapons in the UK and the UK to provide financial support. “It is natural to ask the UK to participate in interest payments proportionate to the contracts UK firms receive. Otherwise EU taxpayers will be subsidizing UK industry.”
No figure has been proposed for a “fair” UK financial contribution. Some sources say this is a deliberate attempt to avoid a serious focus on economic matters, while others say it is impossible to propose UK cooperation without knowing the UK’s potential involvement.
Ahead of Wednesday’s decision, a UK government spokesman said: “We do not comment on internal EU processes.”
The loan now needs to be approved by the European Parliament, with the aim of releasing the first tranche of funds from April.
The EU estimates the €90bn will cover two-thirds of Ukraine’s funding needs, and other “international partners” are expected to fill the gap.
Asked if the UK would be one of the countries contributing to Ukraine’s financing, a government spokesman said: “In total, the UK has committed £21.8bn to support Ukraine through military and financial aid.
“Our support for Ukraine is ironclad. We continue to work with G7 and EU partners to ensure that Ukraine can defend itself.”
The decision was made under a special procedure involving 24 of the EU’s 27 member states, after Hungary, the Czech Republic and Slovakia refused to add their support but agreed not to block the plan.
