UK suppliers to SAFE programmes are competing for a share of 35 per cent. Your EU customer will ask you to prove yours.

On 28 October 2026 the European Commission approved Hungary’s €5.4 billion loan under SAFE, the EU’s €150 billion defence loan instrument. That closed the first round. Over €21 billion remains, and member states can ask for additional or new loans by December. Italy said in July that it will request €14.9 billion by the end of the year.

For British suppliers, one thing has not moved. Talks on UK participation broke down on 28 November 2025, and no agreement has been reached since. UK industry takes part on standard third-country terms. Every British component in a SAFE-funded product therefore counts as non-EU content.

Why 35 per cent is smaller than it looks

SAFE requires at least 65 per cent of the estimated cost of components to come from the EU, the EEA-EFTA states or Ukraine. Everything else must fit in the remaining 35 per cent.

• The cap is shared. British, US, Swiss and other non-EU content all sit inside it. On many platforms, US engines, electronics and software already use much of it.
• It is measured on component cost. It is not a share of contract value, and your margin does not dilute it.
• It is decided at platform level. Your customer, not you, decides how the headroom is spent.

So the question for a UK supplier is not whether you are eligible. It is how much of your customer’s 35 per cent your parts use, and whether you can prove the figure. Where a British and an EU supplier are close on price and performance, the prime will choose the one that leaves more room.

What your EU customer will ask you for

Primes have to evidence the 65 per cent rule to the contracting authority. They can only do that with figures from their suppliers. Expect five requests.

• Cost by origin for each part you supply, on the same cost basis the prime uses for the whole platform.
• The EU content inside your parts. How origin is assigned to a sub-assembly can change the figure, so agree the method with your customer before you send numbers.
• Who owns and controls your business. If you have an EU-established entity, supplying from it may change the position. Whether it does depends on where the part is made and who manages the entity.
• Your export licence route. British military-list items still need a UK licence to reach an EU customer, and the prime will want the timing.
• Design restrictions. Whether any third country can stop the prime changing or replacing what you supply.

What a weak answer costs

A supplier slot on a multi-year joint procurement is usually worth many times the cost of preparing the evidence. The expensive outcome is not a failed test. It is being designed out at bid stage because your declaration arrived late, was vague or used a different cost basis from your customer’s.

What to check now

• Cost your parts by origin at component level, using your customer’s cost basis.
• Document any EU content inside your parts, with the supplier evidence behind it.
• Ask your EU customers what form of declaration they need, and by when.
• Confirm the export licence for each part and destination, and how long it takes.
• If you have an EU entity, test with counsel whether supplying from it changes the position.

Meridian is offering this as a fixed-fee review

Second-round plans are being prepared now, and a figure you can defend is far easier to build before a bid than after award. Our SAFE Eligibility Evidence Review covers one product or system. For a UK supplier it prepares the cost-origin position your customer will ask for: component cost by origin, ownership and control, licensing and design restrictions. You receive a review report with an evidence-based rating and what to fix, plus a submission pack in the format your customer uses.

Send us the part, the programme and the bill of materials you hold, and we confirm scope the same working day. This is a review, not a legal opinion: eligibility is decided by the contracting authority.