Britain and France plan to work together on developing military drones, the defence secretary said on Wednesday.

Referring to an agreement last year to increase military collaboration in a bid to cut costs, Defence Secretary Philip Hammond told a parliamentary committee there would be a joint announcement on drones by London and Paris:

The discussion around industrial cooperation has centred initially on work on unmanned aerial vehicles and work has been going on to prepare an announcement around a commitment to the assessment phase for an unmanned aerial vehicle project.

We will look for a suitable opportunity, probably now in the new year, to make a joint announcement to that effect.

A year ago, BAE Systems said it was in talks with France's Dassault Aviation about working together on the development of unmanned aircraft - also known as UAVs - which are being used increasingly by world armies for both reconnaissance and attacks without endangering pilots.

Hammond said his French counterparts were committed to the idea, despite economic difficulties and a French presidential election next year.

Greater military collaboration with France is seen in Britain as a key plank of efforts to maintain defence capability while slimming down the armed forces to save money.

The coalition government last year slashed defence spending by about eight percent in real terms over four years.

I suspect that the French, post the presidential election, will have to look very hard at their budget plans for the future, Hammond said.

I think the French military and the military procurement establishment is already beginning to think about how to do things more effectively and efficiently and collaboration has to be part of that process.

Hammond said he had assurances from the Treasury that a previously announced increase in defence equipment spending, of one percent in real terms from 2015, would not be affected by any further cuts in total government spending.

I do have a reassurance from the Treasury that the commitment to the one percent increase in the equipment budget remains a firm commitment and whatever happens to the overall package, that part of the budget will be protected, he said.

(Reporting by Mohammed Abbas; Editing by Alastair Macdonald)