BEING locked out of a new EU €500 million defence fund after Brexit could destroy Scotland’s shipbuilding industry, a union has said.

Brussels is set to shut out British companies from participation in the scheme to help member states spend taxpayer money more efficiently.

An EU source has reportedly said that the European Commission agreed to impose “strict conditions” on non-EU companies that wanted to participate in projects financed by the fund, which will be set up next year, and GMB organiser Gary Cook said that exclusion from the defence fund could be the death knell of Scotland’s shipyards.

He said: "Defence manufacturing is vital to UK and Scottish manufacturing.

"Because of Brexit it looks certain that UK companies will be locked out of the defence fund.

"This has the potential to seriously hobble UK companies and it could cause real problems for the long term future of shipbuilding and the development of complex warships.

"The work building the support ships could and should support thousands of jobs in Scotland and across the UK.

"Shipbuilders and workers across defence need to know what the government is going to do to protect our defence manufacturing industries."

The GMB union has already warned that workers at Rosyth dockyard face "an ever more threatening future", and claim that Rosyth dock workers face not getting a share of a £1 billion shipbuilding contract.

The Ministry of Defence has put an order to build Royal Fleet Auxiliary support ships out to international tender, but the union says that hundreds of jobs have already been lost at Rosyth.

In response, an MoD spokesman said: “The UK wants to agree an ambitious future relationship with the EU and we are committed to working together amid a climate of intensifying threats.

“With the largest defence budget in Europe, and all of our warships being built in the United Kingdom, securing thousands of jobs and 20 years of work on the Clyde, we are witnessing a renaissance in national shipbuilding.

"Since 2010 this Government has invested more than £6bn in shipbuilding in the UK, securing thousands of jobs. While in 2018-19 we expect to spend in excess of £750m supporting the fleet.”