France and Germany have concluded that the companies involved in building a joint fighter jet will not be able to reach an agreement and have abandoned the project, officials in Berlin have said in a blow to Europe’s common defence efforts.

The French president, Emmanuel Macron, and the German chancellor, Friedrich Merz, had “reached the shared assessment that the companies will not be able to come together”, an official told Agence France-Presse. “They acknowledge this reality.”

Macron and Merz’s predecessor, Angela Merkel, launched the Future Combat Air System (FCAS) in 2017 to replace France’s Rafale jets and the Eurofighter used by Germany and Spain by about 2040.

Dassault reportedly insisted on being the lead partner in the jet’s development in order to protect its intellectual property, while Airbus pushed for a more equal partnership involving significant technology transfers.