Desperate to maintain global reach but lacking the funds to do it, Britain and France have sealed a 50-year treaty that may smash Europe's hidebound national traditions in defence and armaments procurement.

President Nicolas Sarkozy of France and British Prime Minister David Cameron overcame a long history of mistrust between their countries, interspersed with bouts of war and occasional periods of friendship, when they signed the historic pact in London yesterday.

Under the deal, the two countries will set up a joint facility to carry out simulated tests on their nuclear warheads, until now the very totem of national virility. They will set up a 5000-member rapid reaction force that could be deployed "up to and including high-intensity operations" from as early as next year.

By the early 2020s, they will share their two aircraft carriers, also jealously guarded national icons. British warplanes could fly off France's nuclear-powered Charles de Gaulle and French jets deploy on Britain's planned full-deck carrier, the Queen Elizabeth.

Yet these are only the most visible changes. Britain and France will also work together on the next generation of drones and submarine technology, explore shared training and maintenance for the Airbus A400M transporter, jointly procure new missiles and step up co-operation on satellite communications, cyber war and counter-terrorism.

The cross-Channel neighbours are "natural partners", said Cameron, while Sarkozy declared: "We intend to work hand in glove." Both argued that by pooling key resources, each country could maintain its outreach and better defend its borders yet not erode its sovereignty.

The force for the pact comes, simply, from a cash crunch, especially in Britain.

According to the Stockholm International Peace Research Institute (SIPRI), Britain spent more than US$69 billion ($89.5 billion) on defence last year, placing it third in the world after the United States and China, while France spent US$67.31 billion, the fourth largest. Together, Britain and France account for 45 per cent of Europe's defence budget, 50 per cent of its military capacity and 70 per cent of all spending in military research and development. Britain and France are among the few members of Nato to honour the alliance's minimum requirement of earmarking at least 2 per cent of gross national product (GNP) on defence.

Yet these huge outlays have been relentlessly squeezed by the aftermath of the 2008 financial crisis, by the cost of deployment in Afghanistan (and, in Britain's case, in Iraq too) and by the spiralling cost of new equipment and maintaining a nuclear posture.

Over the past 10 years, a whole series of procurement schemes has run into storms. They include national ventures, such as France's Rafale fighter, which was developed in the 1980s but has failed to secure an export market, and Britain's plans to build two 65,000-tonne aircraft carriers, the largest ships the Royal Navy has commissioned.

Plans for the second flat-top, the HMS Prince of Wales, were already in doubt following a budget review last month, which slashed Britain's defence allocations by 8 per cent, and are likely now to be doomed if co-operation with France goes ahead. Multinational schemes such as the A400M and the four-nation Typhoon Eurofighter have been hit by catastrophic price increases, reduced orders and delays.

Analysts say that Europe's two military giants should be able to achieve economies of scale in important areas. Soon after the pact was announced, BAE Systems of Britain and Dassault of France declared they were willing to work together on unmanned aircraft.

Opinions differ, though, whether co-operation will work when national interests - either strategic or economic - are in conflict, and how joint operations will unfold when two diverse military cultures are involved.

"What will be interesting now is how they manage strategic control and who will authorise what," a New Zealand military source told the Herald.

"There will be many global situations where both are equally affected, such as with Nato and the UN. But let's wait and see what happens when you have French aircraft on a UK carrier or vice versa, and you have a situation where one country is affected, such as for example, Argentina and the Falkland Islands, or something in Tahiti or Noumea, which is in the French zone of influence. There is no guarantee the UK will share France's view."

In contrast, Alastair Cameron at the Royal United Services Institute thinktank said he was convinced the treaty could work, and even blaze a trail where previous European security ventures had failed.

Among projects that have faltered or are dormant are the Eurocorps, which exists only as a token Franco-German force of 1000 troops, and plans set 12 years ago, under Tony Blair and Jacques Chirac, for France and Britain to jointly build warships.

Alastair Cameron said the difference today was in a new pragmatism.

"What we have here is not a statement of intent, it is practical co-operation that has been at work for months now, before the [May British] general elections," he said.

"There will be many areas in which this co-operation is effective," he added. "In addition, assets will remain nationally owned, and there is not a veto that one country will have over the use of those assets. What we are talking about is putting together those assets where and when we are able to see eye-to-eye on the importance of the mission."

If it works, other nations in Europe could be spurred to pool resources, he said. In what could be early signs of this trend, Belgium, France, Germany and the Netherlands agreed in June to group nearly 200 transport aircraft under a single command. Italian Prime Minister Silvio Berlusconi has said that states could halve their defence budgets if they pooled resources. The question will be put to the next EU summit, on December 16 and 17, after being debated by defence ministers, he said.