With budgets slashed because of the financial crisis, EU leaders have agreed to work more closely on making defence spending go further.

At a summit in Brussels, they’ve called on member states to spread the cost of developing expensive military kit. Developing a European drone and air-to-air refueling capabilities are on the cards.

But Britain has urged caution. It welcomes increased cooperation, but draws the line at a European army.

“With around 1.5 million jobs and a turnover of 96 billion euros, this is a sector that’s very important for the European economy. But not only the European economy, as it’s very well said in the conclusion of the European Council, ‘Defence matters,’” said Jose Manuel Barroso, EU Commission President.

EU leaders also welcomed a new centralised institution – designed to deal with ailing banks.

French President Francois Hollande said the new mechanism for saving or shutting down troubled banks would help prevent new financial crises and spare governments from having to save those failing.

But back on defence, Hollande failed to win any funding promise for the country’s military operations in Africa.

Speaking from Brussels, Euronews correspondent Fariba Mavaddat said: “With contradictions in the interpretations of member states on how to contribute to European defence, it looks as if they have a long way to go before they reach a united front on a militarily stronger Europe.”