Britain’s decision this week to join a €60bn EU defence loan scheme for Ukraine has set a “template” for such deals in future, according to the bloc’s outgoing ambassador to London, with the two sides now in “the phase of winning”.
An attempt by the UK to join an EU defence fund last year fell apart after Prime Minister Sir Keir Starmer refused to pay the entry fee. But Pedro Serrano told the FT that Brussels was determined to make Britain a key pillar of European defence and economic security.
Serrano was appointed to his role in September 2022 at a time when then premier Liz Truss had just declared that “the jury is out” on whether France was “friend or foe”.
The veteran Spanish diplomat insisted the political landscape had shifted completely. “The United Kingdom is one of the most important military powers in Europe with a very important defence industry,” he said. “If we’re going to be successful, we will be successful together.”
Starmer signed up to the EU defence loan scheme to Ukraine in Paris this week, ensuring British companies can fully benefit from military orders placed by Kyiv. It will pay contributions to the scheme proportional to the value of the contracts.
Last year Starmer refused to sign up to a separate “Safe” EU defence fund after talks foundered on the multibillion-euro access fee demanded by Brussels, with France driving a particularly hard bargain. “Both sides acknowledge that the outcome was not satisfactory,” Serrano said.
Serrano, 64, said the Ukraine loan fund was a “very, very positive step”. “We have a good template now to look at possible future initiatives that may facilitate the participation of British companies,” he said.
Some €18bn of the original €150bn Safe scheme remains unallocated after the European Commission, the bloc’s executive arm, rejected some projects and a few member states scaled back spending.
EU officials say the UK could potentially join in time to benefit from the reallocation and they will outline a plan before the end of the year. A successor scheme has been mooted.
“We are now in a phase of winning and rebuilding a stronger relationship,” Serrano said at the EU’s Europe House base in Smith Square in London, formerly Margaret Thatcher’s Conservative election campaign HQ.
But he confirmed that tough haggling lay ahead with Andy Burnham, who is set to replace Starmer as prime minister, over the shape of a new EU-UK “reset” deal at a rearranged summit that will take place in the autumn.
Serrano, a senior EU diplomat for a quarter of a century, said Brussels would continue to push for EU students to be given access to UK universities on a “home fees” basis as part of a wider “youth mobility scheme”.
“It’s an important part of the negotiations,” he said. British students would be able to study in EU universities for relatively low, state-subsidised fees, Serrano added, describing Britain’s international fees, which cover EU students, as “extremely high”.
Asked about British irritation that Brussels had unilaterally postponed a planned July summit — Starmer had seen the “reset” as part of his political legacy — Serrano said the EU had little choice.
“Summits are meetings among leaders,” he said. “So it was to a certain extent natural or preferable to allow a new prime minister to be in place and to assume full ownership of the process.”
Burnham told MPs on Monday that he wanted to build on Starmer’s work in preparing the summit. The former Greater Manchester mayor previously said he wanted Britain to rejoin the EU “in my lifetime”, but has put the ambition on the back burner in recent weeks.
Serrano, who is retiring to his garden in Madrid and a new life in academia and writing books, declined to say whether he shared that goal, describing it as a matter for British voters.
But he said European economic integration would deepen, as the bloc attempted to shield itself from the crossfire of global trade wars. “We provide economic security to each other,” he said.
He hinted that potential new EU membership structures, which diplomats have suggested could include a looser outer circle that takes in Ukraine, might create new options for British reintegration in the future.
Asked what the EU lost when Britain voted for Brexit in 2016, Serrano seemed surprised. “It’s the first time that question has been turned around that way,” he said.
“I think we lost a very important member state, one that is capable of wielding power and mobilising military power,” he added. “You don’t have many countries in Europe that do that.”
Diplomats in Brussels always used to pay tribute to British pragmatism in the face of the more inflexible approach of some other big member states. Is that missed?
Serrano smiled: “I’ve seen pragmatism coming from many countries and lack of pragmatism too. I wouldn’t assign the exclusivity of pragmatism to anyone.”
