EU to propose joint defence fund

It says participating states would be able to borrow from the fund to buy assets for their national militaries and would be able to offset their contributions from their EU budget targets

It also says the EU should lift a ban on using its existing budget, as well as using European Investment Bank lending, to pay for research into military technology, such as drones or cyber-defence, in a related European Defence Research Programme.

The European Defence Fund would aim to save €25 billion to €100 billion a year in procurement costs.

The EU could also allocate €90 million between 2017 and 2019 and up to €3.5 billion between 2021 and 2027 from its joint budget for the European research fund.

The European Defence Agency, a branch of the EU foreign service, in October already allocated €1.4 million for a pilot project due to run until 2018.

The project is to fund Portuguese-led research into sensors that help soldiers detect enemy troops inside buildings in urban conflict. It will also pay for Dutch and German-led research into border surveillance by drones, including by “swarms” of small, autonomous aircraft.

The Commission proposal comes amid wider plans to create an EU "defence union" in response to Brexit and to the election of Donald Trump, a Nato-sceptic, in the US.

France, Germany, Italy and Spain have said the European public wanted the EU to play a larger role in the security arena in reaction to Britain’s decision to leave the bloc and to the migration crisis.

Earlier this month, EU states agreed to create a new military command HQ in the EU foreign service and joint rapid-reaction forces that could be sent into action in African or Middle Eastern states.

Trump in his campaign speeches said that Nato was out of date and that the US might not defend allies who did not spend more on their own forces.

Twenty-two of the 28 EU member states are in Nato, but only the UK, Estonia, Poland, and Greece meet Nato's target of spending at least 2 percent of GDP on defence.

According to one example of waste cited by Reuters, EU states currently have 19 types of armoured infantry fighting vehicle, compared with one in the US.

France and Germany also rely on ageing military transport planes, with some navy helicopters, for instance, grounded due to technical faults.

A recent report by the German military, also seen by Reuters, showed that its Tornado jets had a readiness rate of just 44 percent and that its Eurofighter fleet was ready 52 percent of the time.

Speaking earlier this month, Jean-Yves Le Drian, the French defence minister, said the EU was undergoing a sea change in its defence structures.

“I was always for an operational Europe of defence, not a declaratory one, we are now an operational Europe of defence,” he said.

Paolo Gentiloni, Italy’s foreign minister, said the new military HQ in the EU foreign service was “not yet a European general staff” but “that was the premise” of the project in terms of future development.

EU foreign affairs chief Federica Mogherini said “there was a growing awareness among the European public … that security is also a matter for the EU”.