New Delhi, Nov. 30 -- Talks on the U.K. joining a major European Union defense fund have ended without agreement, the British government said Friday, in a blow to its post-Brexit reset with the 27-nation bloc.

Prime Minister Keir Starmer, elected last year, pledged to repair ties with the EU strained by Britain's acrimonious departure in 2020. In May, the U.K. and the EU announced new agreements on trade, travel and defense that Starmer hailed as a "win-win."

The plan was for the U.K. defense industry to access a 150 billion euro ($170 billion) EU loan program, known as Security Action for Europe, or SAFE, set up to help Ukraine and the rest of Europe defend itself. That would allow British firms to secure cheap EU-backed loans to procu...