(Bloomberg) -- The U.K. is braced for a more substantive French response to the loss of its $66 billion submarine deal with Australia, with potential long-term ramifications for the western alliance, according to diplomats familiar with the thinking in London.
Prime Minister Boris Johnson has sought to calm tensions following the announcement of the defense pact last week, but British diplomats have warned government officials in London that the relationship could get complicated, one of the diplomats said.
The envoy, who spoke on condition of anonymity to discuss sensitive matters, said Paris could reassess its relations with NATO and China, while pushing the European Union harder to develop the capability to act independently from the U.S. France hasn't signaled it's ready to leave the postwar military alliance, but it has previously questioned whether NATO is fit for purpose.
The French government is expected to view this as a key strategic moment akin to the 1956 Suez crisis -- when Britain and France lost much of their influence in the Middle East -- especially as it comes so soon after U.S. President Joe Biden's withdrawal from Afghanistan, the diplomat said.
The envoy added that Paris is expected to remain committed to the Indo-Pacific given its interests in the region.
France has pulled out of meetings scheduled with the U.S., Australia and the U.K., and recalled its ambassadors from Washington and Canberra.
But Britain has mostly been spared the government in Paris's ire, with the response so far limited to heated insults and the cancellation of a ministerial visit to London.
Read more: Macron's Not Ready to Calm Down After Submarine Humiliation
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