By Cristina Gallardo
The European Union and the U.K. have agreed on a defense and security deal, which opens the door to British arms makers to take part in the bloc's procurement programs.
Under the agreement, British defense companies like BAE Systems could get access to the EU's planned defense procurement loans program, worth 150 billion euros ($167.47 billion), potentially leading to additional orders from the bloc for the firms.
"The EU and the U.K. will conduct regular exchanges on the development of respective security and defense initiatives, including on defense readiness and defense industry," the agreement said. "The U.K. and the EU will explore possible mutual involvement in respective defense initiatives in accordance with the respective legal frameworks."
Only countries outside the EU that sign defense and security agreements with the bloc could participate in the new procurement program and British defense companies would have been largely excluded without Monday's deal.
However, EU leaders still need to finalize the details, including how much funding non-EU countries could access as well as the price of entry. The U.K. will need to request access formally.
"This is a clear win for [the] U.K. industry and broader EU capability goals," Loredana Muharremi, equity analyst at Morningstar, said.
As part of Monday's agreement, the EU and Britain also agreed to exchange information on emerging disruptive technologies, including artificial intelligence in defense, and will cooperate to make their underwater infrastructure more resilient, according to the agreement.
Both sides will also collaborate on cybersecurity, and countering proliferation of weapons of mass destruction, small arms, light weapons and arms-exports control.
EU leaders and British Prime Minister Keir Starmer rubber-stamped the deal on Monday during a summit in London as part of talks to reset the countries' relationship following years of tensions due to Brexit.
British and EU arms makers have signed a cascade of contracts since Russia's full-scale attack against Ukraine in February 2022, which have lifted their shares to record levels.
Plans by the U.S. to pivot its attention toward the Indo-Pacific to counter China, potentially at the cost of reducing its military presence in Europe, has also fueled a sense of urgency among European policymakers for becoming more autonomous on the production of military equipment.
Write to Cristina Gallardo at cristina.gallardo@wsj.com
(END) Dow Jones Newswires
05-19-25 0913ET
