Ukraine war latest: EU agrees new funding for Kyiv's war effort

Volodymyr Zelenskyy has thanked EU leaders for the loan to Ukraine that was agreed overnight in Brussels.

The Ukrainian president said the deal ensured financial security for his country and said Russia's assets in a Belgian clearing house must be kept frozen.

"It is important that Russian assets remain immobilized and that Ukraine has received a financial security guarantee for the coming years. Thank you for the result and for unity. Together, we are defending the future of our continent," he said.

Volodymyr Zelenskyy had been hoping the EU would agree to use frozen Russian assets to help Ukraine.

We're yet to hear from him since it became clear that wouldn't be happening, with the bloc agreeing on a loan instead.

Here's what we said yesterday, when asked what he would say to Belgian people to address their concerns around using frozen Russian assets:

"I would look at this question from the point of view of morality and justice. 

"Of course Ukraine has the right for this money, because Russia is destroying us and to use these assets against their attacks is absolutely just.

"One can fear certain legal steps in court from the Russian Federation, but it's not as scary as when Russia's at your borders.

"So while Ukraine is defending Europe, you must help Ukraine."

We've just had a rather predictable response from Russia to the EU's announcement of a new funding package for Ukraine.

Kirill Dmitriev, who has been a key envoy for the Kremlin in recent negotiations with the Americans, has described EU leaders as "warmongers".

He said "voices of reason" in the bloc - presumably the likes of Hungary and Slovakia - had been ignored.

Ursula von der Leyen, president of the European Commission, spoke to the media after the EU's new loan for Ukraine was announced.

The €90bn interest-free loan will be funded by borrowing, she said, backed up by headroom in the bloc's budget and an agreement to amend its so-called "multiannual financial framework".

That's how the EU sets its longer-term budgets and spending plans.

"Ukraine would only need to pay back the loan once it receives reparations," she explained.

"Until then, the immobilised Russian assets will remain immobilised and the union reserves its right to make use of the cash balances to finance the loan."

The loan will cover Ukraine for the next two years, she said.

Thursday's EU summit on Ukraine has been and gone without a deal to use frozen Russian assets to fund Kyiv's war effort.

European leaders are hoping a €90bn interest-free loan, without doubt a huge amount of money, is a good enough compromise.

The bloc's members had been reluctant to ignore the concerns of Belgium, where most of the assets are based, and whose government feared Russian reprisal, by forcing through a deal against its wishes.

Sky's Europe correspondent Alistair Bunkall explains the country's position below:

But why was there such a push to use the frozen assets all of a sudden, after almost four years of war?

Bunkall wrote this explanation ahead of Thursday's talks:

The US, which has so far given billions of dollars to Kyiv, is losing interest under Trump and can no longer be relied upon for financial support.

Previously, the EU had been giving the interest generated from frozen Russian assets to Ukraine, but was worried it might destabilise the Eurozone economy if it touched the assets itself.

That changed as Ukraine's need has become more acute and fears over Russia's wider imperialist ambitions have grown in recent months.

An unlocking of seized Russian assets was also being seen as a way to buy Brussels more leverage in peace negotiations, as well as reducing Kyiv's dependency on Washington.

… Denmark's Prime Minister Mette Frederiksen, European Council President Antonio Costa, and European Commission President Ursula von der Leyen pictured after the EU struck its funding deal for Ukraine.

Ahead of the late-night talks in Brussels, the UK government had indicated it was prepared to share the risks with European allies of using frozen Russian assets to aid Ukraine.

What we've ended up with instead, as we've been reporting overnight, is €90bn for Kyiv via an interest-free loan from the EU. 

Belgium had been the most concerned about using Russian assets, as most of those frozen since the war began are kept there, and it feared potential future reprisals from Russia.

Sir Keir Starmer's official spokesman was repeatedly asked if the government was willing to share the risk of unlocking frozen Russian assets for use in Ukraine.

"I think it's evident within the government's actions that what we want to see is those immobilised assets used to support Ukraine," he said.

"We believe delivering these funds sends a very clear signal to Putin that he cannot outlast the support of the UK and our allies, that is what we remain focused on."

Germany's Friedrich Merz says the EU's new €90bn interest-free loan for Ukraine "sends a clear signal" to Vladimir Putin: "This war will not be worth it."

In a post on social media, the chancellor added: "We will keep Russian assets frozen until Russia has compensated Ukraine."

Merz has been one of Ukraine's most vocal backers since becoming German chancellor, and played a leading role in the coalition of the willing alongside Sir Keir Starmer and Emmanuel Macron.

Volodymyr Zelenskyy hasn't been given the frozen Russian assets (totalling some €190bn) he'd hoped for, but a €90bn (£79bn) interest-free loan will still go some way to helping Ukraine's war effort.

The International Monetary Fund (IMF) estimates Ukraine will need around €135bn ($158.5bn/ £118bn) for 2026 and 2027. 

The head of Ukraine's parliamentary budget committee said the government still needed to secure $18 to $20bn in external financing to be able to cover next year's budget gap.

Kyiv plans to spend the bulk of its state revenues - just over 27% of its GDP - to fund its defence efforts in 2026, with the daily cost of fighting Russian forces now estimated at $172m (£128m)  in 2025 compared with $140m (£104m) a year ago, officials said.

Emmanuel Macron is among the EU leaders giving a press statement in Brussels tonight.

He says France was not opposed to using frozen Russian assets to fund Ukraine but insists the loan deal reached shows Europe is committed to supporting Kyiv.

But he said it would become "useful" at some point to reengage with Vladimir Putin, and said Europe and Ukraine should try to find the right format for possible talks.

For now, he said the loan "was the most realistic and practical way" to fund Ukraine - and that more sceptical EU members Hungary, Slovakia, and the Czech Republic would be protected from any financial fallout.