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Britain and Germany have signed what the UK government is calling a "landmark defence agreement" aimed at boosting security, investment and jobs.
Under the agreement, German defence company Rheinmetall will open a new factory in the UK to manufacture barrels for artillery guns – supporting 400 jobs.
Both countries will work together to develop drones and a new long-range missile.
German maritime surveillance aircraft will also periodically fly patrols of the North Atlantic from RAF Lossiemouth in Scotland.
"Today is a significant day for UK and German relations and in the history of our two countries," Defence Secretary John Healey said at a press conference following the signing.
"This is the driving force behind our Nato-first UK defence strategy, behind our reset of UK relations with Europe," he said.
Labour promised to build closer military ties with Germany while in opposition and this is part of a wider push by this government to reset relations with key European allies post Brexit.
The German Ambassador to the UK, Miguel Berger, said the European Commission will have a very strong focus on defence in the next five years, and there is space for the UK to be involved.
"Obviously the question is - what can the role of the British defence industry and of the capacities of the United Kingdom be in this joint endeavour?" he told BBC Radio 4's Today programme.
The UK already has a defence pact with France – the Lancaster House Treaty signed in 2010 by David Cameron and Nicholas Sarkozy – but this is the first with Germany.
The UK and Germany are the two largest defence spenders in Europe and the biggest European military donors to Ukraine.
Healey said it was a "milestone moment", bringing the two countries' militaries and defence industries closer.
In reality the two nations already co-operate as members of the Nato alliance.
In a joint venture, they are also building new tanks and armoured vehicles for the British Army, Germany’s Rheinmetall and the UK’s BAE Systems-formed RBSL to manufacture the Boxer armoured fighting vehicle and the latest Challenger 3 tank in Telford, Shropshire.
PA MediaUnder the new Trinity House Agreement, Rheinmetall will build a factory in the UK to produce barrels for artillery guns – something the UK stopped doing more than a decade ago.
The site for the factory has not yet been announced, but the Ministry of Defence (MOD) says it will support more than 400 jobs and use British steel produced by Sheffield Forgemasters.
The steelmaker was recently acquired by the UK Government. The first artillery gun barrels are expected to roll off the production line in 2027.
The Trinity House Agreement also includes a commitment to develop a new long-range missile, which the MOD says will be more precise and can be fired further than any current systems – the UK’s Storm Shadow and Germany’s Taurus. Unlike the UK, Germany has refused to supply Ukraine with its Taurus cruise missile.
The UK and Germany will further co-operate on developing drones that might be able to fly alongside Typhoon jets operated by both countries.
German P8 maritime surveillance aircraft will periodically operate out of RAF Lossiemouth in Scotland to help patrol the North Atlantic. Other Nato allies have been doing the same for a number of years.
There is also a promise to bolster the defence of Nato’s eastern flank; both the UK and Germany have already sent hundreds of troops to the Baltic states as part of Nato’s enhanced defence plans following Russia’s invasion of Ukraine.
Germany’s Defence Minister Boris Pistorius said the agreement would strengthen Europe and Nato.
"We must not take security in Europe for granted," he said, adding the projects being undertaken would be open to other partners.
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