UK defence firms gain EU loan access as Starmer departs
Outgoing Prime Minister Keir Starmer used his final trip to Kyiv to lock the UK into a €90 billion EU defence loan, securing new contracts for British firms before handing power to Andy Burnham.
Keir Starmer travelled to Ukraine on Thursday for a farewell visit ahead of stepping down on Friday. He met President Volodymyr Zelenskyy to signal that British backing will remain intact when Andy Burnham becomes prime minister on Monday. "Our cast-iron support for Ukraine will always endure," Starmer said.
The most consequential outcome of Starmer’s final days in office for European markets is the UK's entry into the EU’s €90 billion Ukraine Support Loan. Under this agreement, British defence contractors gain direct access to contracts funded by the EU programme. This creates a new financial link between the UK and the continent's defence industrial base.
In exchange for this corporate access, London must cover a proportional share of €3 billion in annual interest rates. That liability is calculated based on how much British firms actually benefit from the contracts. Brussels has hailed the arrangement as an important step in strengthening Europe's collective support for Kyiv.
Beyond the defence sector, Starmer's resignation over domestic policy U-turns has introduced immediate diplomatic friction. Brussels has postponed a planned UK-EU summit, originally scheduled for 22 July, delaying broader discussions on economic cooperation until after the summer. This stalls the gradual rapprochement Starmer had pursued to rebuild relations with Europe after Brexit.
"Throughout this conflict, I have seen the incredible fortitude of the Ukrainian people and the iron will of a nation that refuses to be cowed," Starmer said. "Their stand has not only defended its own freedom, it has preserved the security of Europe."
Burnham will become the UK's fifth prime minister since Russia's full-scale invasion in 2022. He takes office with the UK already anchored in the UK-France-led "Coalition of the Willing", an alliance of more than 30 countries mapping out long-term security guarantees and a potential multinational peacekeeping force.
