Europe is gripped by a defence crisis. And Brussels wants to talk about fish

Even in the short term, exclusion from the funds is not necessarily a calamity for Britain either, argues Sander Tordoir, chief economist at the Centre for European Reform (CER).

“The €150bn fund is not a big deal,” he says. “It’s merely back-to-back loans where the commission passes slightly lower borrowing rates on to member-states.

“Only a few countries have the higher rates and defence ramp up plans, so barely anyone will use it. But it is significant because of what it signals for defence spending more broadly.”

He also believes Friedrich Merz, Germany’s chancellor in waiting, will provide a counterweight within the EU against French intransigence. Merz recently recently marshalled support for €600bn in borrowing to fund Berlin’s own rearmament plans, seeing off opposition from Germany’s Greens.

“There’s no doubt Merz is instinctively much more inclined to include the UK than Macron and France, but London will need to engage Berlin, rather than passively hoping for German goodwill.”

Even then, Lammy and Sir Keir Starmer still need to convince Paris and other EU capitals to move the conversation on “from fish to guns”, Tordoir warns.

“This is about the single market, which is in the EU’s prerogative. Engaging only bilaterally with Germany would be a classic British diplomatic own goal – the UK has to make sure the commission is on board too.

“The direction of travel here is that both Germany and France are Gaullist now and want to produce their own arms. If the UK wants a piece of the pie, it needs to be willing to sign a partnership.”