France raises questions over UK participation in EU’s €5bn tech start-up fund

France has raised questions over UK participation in a €5bn EU equity investment fund for tech start-ups, in a move that European diplomats say highlights the continuing tensions over the EU-UK “reset” negotiations.

The UK, which left the EU under Brexit six years ago, has agreed to contribute €150mn in seed capital for the fund, which is designed to boost investment in Europe’s tech sector as it struggles to compete with the US and China in the race for technological domination.

Ekaterina Zaharieva, European commissioner for start-ups, research and innovation, told the FT in May there was a “mutual interest” in the UK joining the fund, but diplomats now say Paris is seeking to attach stringent conditions to any deal.

“The French are raising objections. They argue the UK is not in the EU, so why are we gifting the British opportunities when we need to ensure this initiative is an EU initiative for the benefit of EU member states,” said one EU diplomat.

France, alongside some other EU member states, has also argued that striking side deals with the UK risks reducing EU leverage to extract concessions ahead of a crucial summit this autumn to finalise the existing “reset” package with the UK.

“France is taking a hard line, but three or four other member states are also asking ‘what’s in it for us?’ if we let the UK join the Scaleup fund — some are arguing there needs to be a ‘quid pro quo’,” a second diplomat added.

Diplomats said the clock was now ticking on efforts to resolve French objections in order for the UK to be included in the next cycle of the Scaleup Europe Fund which starts from 2027.

French diplomats said Paris had “no objection” in principle to the UK joining the programme, but had requested details from the European Commission on how the UK — as a non-EU state — should participate in it.

“This is a technical debate. Questions have been sent to the Commission to understand the method of calculation for UK participation,” they added.

EU member states…