France has agreed to pay Britain as much as £140m to design and develop an aircraft carrier based on the design of those being built for the royal navy. It is the first concrete step towards what would be the biggest joint military programme in a generation. The deal, hammered out in London by John Reid, defence secretary, and Michèle Alliot-Marie, his French counterpart, would see France pay Britain as much as £100m in three installments over the course of this year for the rights to the UK design. In addition, France has agreed to put in another £40m towards the development of the carrier, which remains in the final stages of the detailed design work needed before construction can begin.

Mr. Reid said any decision on whether to move forward as a bi-national programme would be made at the end of the year, when the UK is expected to sign a construction contract. But it appears unlikely France, which has invested financially in the programme and has invested considerable political capital towards an agreement, would back off in 12 months. Senior British negotiators sought to portray the deal as a victory for the ministry of defence. British procurement officials have already committed to spending £300m during the development stage of their two-carrier programme, and the French payments have suddenly cut that budget nearly in half.

For the French, the deal allows them to jump approximately two years ahead in their efforts to build a partner ship to their current carrier, the Charles de Gaulle, since their programme, codenamed Project Juliette and developed by the French shipbuilder DCN, is far less advanced than the royal navy design drawn up by Paris-based Thales and BAE Systems.