The UK could reap greater benefits from a €90bn (£78bn) EU loan for Ukraine if it agrees to help pay the cost of borrowing after European countries signed off long-awaited financial aid for Kyiv.
British firms could have greater opportunities to supply defence equipment to Ukraine funded by the loan if the government agrees to a "fair" contribution towards EU borrowing costs.
Senior EU diplomats meeting on Wednesday approved a long-awaited loan for Ukraine, which includes the new element of a more open door towards the UK.
The UK clause, including a requirement for British financial contribution, had been approved by Monday, according to three diplomatic sources. EU member states, however, will need to hold further talks on how to include the UK, including agreeing on a list of products that could be procured from British suppliers.
The decision comes after UK Prime Minister Keir Starmer signalled he would like to reopen talks with the EU on a defence pact. Negotiations to join the EU's €150bn Security Action for Europe (Safe) programme collapsed last year.
As the current Safe scheme progresses without the UK, the loan for Kyiv offers a more immediate way for the EU and UK to find rapprochement on defence.
The loan is a crucial lifeline for Ukraine, which has been enduring months of brutal Russian attacks damaging its energy and heating systems, leaving people in the cold and dark while the country is in the grip of a bitterly cold winter.
EU leaders last year agreed to lend Ukraine the money to fill a critical funding gap in 2026 and 2027 as Kyiv risks running out of money to fund its defence, pay public servants and pensions.
The loan will be funded by borrowing on capital markets, secured against unused spending in the EU budget. EU leaders alighted on this solution after disagreeing over the alternative of securing the loan against Russia's frozen assets.
Under the plan, €60bn is earmarked for Ukraine's defence and €30bn for general budget support.
The EU has said Ukraine would be required to buy military equipment from domestic suppliers, the EU or closely associated countries, such as Norway. But if critical kit was not available in those countries, Kyiv could secure a permission from Brussels to buy from other countries, including the US.
The intention is to ensure a European preference but give Kyiv flexibility to buy, for example, US Patriot missile defence systems.
The updated version of the proposal, approved on Wednesday, has introduced two new clauses aimed at giving Kyiv greater flexibility to buy from non-EU countries that have signed security pacts with the union.
One clause is aimed at the UK. Ukraine would be allowed to buy military equipment from a country that has committed to "provide a fair and proportionate financial contribution to the costs arising from [EU] borrowing" commensurate with the value of contracts won. In addition, the country should also have a security and defence partnership with the EU and be able to demonstrate it is providing "financial and military support to Ukraine in a significant manner".
The UK and EU signed a security and defence partnership last May as part of the reset.
An EU diplomat told the Guardian it made sense to open up the possibility for Ukraine to buy weapons in the UK - and for the UK to make a financial contribution. "It is natural to ask the UK to participate in interest repayment proportionally to the contracts UK firms would obtain. Otherwise EU taxpayers would be subsidising UK industry."
No figure for a "fair" UK financial contribution has been proposed. Some sources say this is a deliberate effort to avoid intense focus on finances, while others say it would be impossible to propose a UK contribution without knowing the UK's potential involvement.
Before Wednesday's decision, a UK government spokesperson said: "We do not comment on internal EU processes."
The loan now needs to be approved by the European parliament, with the aim of releasing the first tranche of funds from April.
According to EU estimates the €90bn covers two-thirds of Ukraine's funding needs and other "international partners" are expected to fill the gap.
Asked whether the UK would be one of the countries to contribute to Ukraine's financing, the government spokesperson said: "In total, the UK has committed £21.8bn in support for Ukraine through military and fiscal assistance."
"Our support for Ukraine is iron-clad. We continue to work with G7 and EU partners to ensure Ukraine can defend itself."
The decision was taken under a special procedure involving 24 of the EU's 27 member states after Hungary, the Czech Republic and Slovakia declined to add their support but agreed not to block the plan.