UK PM Starmer nears EU defence pact in shadow of Trump trade talks

By Andrew MacAskill, Alistair Smout and William Schomberg

LONDON/WASHINGTON (Reuters) - Britain is edging towards a new defence agreement with the European Union that officials on both sides hope will help to improve post-Brexit ties following U.S. President Donald Trump's upending of security and trade alliances.

British Prime Minister Keir Starmer has been trying to reset ties with the bloc since he was elected last year and his government has focused on security and defence first - an area of strength for Britain.

That could pave the way for closer cooperation elsewhere, but Starmer needs to avoid appearing to move too closely towards Europe as his government is also seeking an improved economic deal with the United States to lower some U.S. import tariffs.

Starmer will hold talks with Commission President Ursula von der Leyen in London on Thursday and British and European officials are confident they will be able to strike a defence agreement at a planned Britain-EU summit next month.

Miguel Berger, German ambassador to London, said on Thursday that the reset summit on May 19 was now taking place in a "very difficult geopolitical situation."

"That makes it all the more important that European Union, the United Kingdom, the wider Europe, cooperate jointly as much as possible," he told a UK Trade and Business Commission event.

The May summit will likely produce a communique setting out a timetable for negotiations on other areas where Britain and the EU could work together more closely, including energy, fish, food standards and youth mobility, Berger added.

GEOPOLITICAL FALLOUT

Britain, which left the EU in 2020 after a landmark 2016 referendum vote, is trying to navigate the geopolitical and economic fallout from Trump's imposition of worldwide tariffs and questioning of U.S. security protections for allies.

Starmer's government was also elected on a mandate to grow the economy, a feat that has been made harder by tariff uncertainty threatening a global slowdown.

Seeking to improve UK-U.S. trade ties and secure a reduction on some U.S. tariffs, British finance minister Rachel Reeves is due to meet U.S. Treasury Secretary Scott Bessent in Washington.

Reeves on Wednesday said that Britain would not lower standards in sectors such as food or autos in pursuit of a deal with the U.S. but it was open to seeking a reduction in trade barriers between the two sides.

As an example of the tightrope facing Britain, the U.S. could demand greater market access for those food producers which are already relatively aligned with UK standards, but London would not want to grant anything that either damages its own farmers or the prospects of greater UK-EU alignment on food.

Britain could also lower its tariffs on U.S. cars.

In Washington, Reeves also met with European finance ministers and called for greater defence co-operation on the sidelines of the International Monetary Fund and World Bank meetings.

Britain is hoping to be able to access the EU's new 150 billion euro rearmament fund, both to enable its companies like BAE to win contracts and to potentially do joint defence projects with EU countries.

Starmer said earlier this year that he hoped for closer ties in areas including improving military mobility and logistics, protection from sabotage, developing military technology and deepening industrial collaboration.

As part of the improved relations with Brussels, European leaders are also likely to demand a deal to allow young Europeans to live and work in Britain, a policy that risks angering those voters who backed Brexit, in part over concerns about immigration.

Some in Starmer's party also agree with that policy, and more than 60 Labour lawmakers wrote to the minister handling EU negotiations in a letter released on Thursday calling for a youth visa scheme for British and European citizens under 30.

(Reporting by Alistair Smout and Andrew MacAskill; writing by Kate Holton; Editing by Kirsten Donovan)