The UK has approved a £1.6bn export finance facility that will back the sale of air defence missiles to war-torn Ukraine.

Prime Minister Keir Starmer announced the deal following a summit in London yesterday where European leaders had gathered to discuss their strategy for achieving a lasting peace agreement with Russia.

Under the contract, UK Export Finance (UKEF) will guarantee a loan to the Ukrainian government that is tied to the procurement of 5,000 lightweight-multirole missiles (LMMs) from defence manufacturer Thales.

“Our starting point must be to put Ukraine in the strongest possible position,” Starmer told reporters on March 2. “This [facility] will be vital for protecting critical infrastructure now and strengthening Ukraine in securing the peace when it comes.”

It is forecast the UKEF-backed loan will create 200 new jobs in Belfast and triple production of the lightweight missiles, which are used to repel Russian airstrikes.

“Ukraine has already put the highly capable LMM missile to use as part of its air defences where it has proven to be incredibly effective in protecting civilians and critical infrastructure from Russia’s bombardment,” the UK’s Ministry of Defence says.

The deal follows a Defence Export Support Treaty signed by the UK and Ukraine in July 2024, which granted Kyiv access to £3.5bn in UKEF capacity for the purchase of military goods and services.

Thales will deliver an initial £1.16bn contract, with the potential for a further £500mn of additional work, while an unnamed Ukrainian firm will manufacture launchers and command and control vehicles.

Thales says the missiles have a range of more than 6 kilometres and can be fired from a variety of platforms on land, sea and air.

Following the London summit, European states including the UK and France are set to help Ukraine devise a plan on stopping the war, which they will then discuss with the US.

“We are at a crossroads in history today. This is not a moment for more talk, it is time to act…. Time to step up and lead and to unite around a new plan, for a just and enduring peace,” Starmer said.

Last week, the UK vowed to increase spending on defence to 2.5% of GDP by April 2027 and confirmed an ambition to spend 3% of GDP on defence in the next parliament.

Export finance banks – which work in tandem with export credit agencies such as UKEF – say activity is booming in the defence sector on the back of heightened geopolitical tensions.

As reported by GTR in late 2024, UKEF also provided some £9bn in guarantees to help Poland build a missile defence system as the country bolsters its armed forces following Russia’s invasion of Ukraine.