We've shared sports stars, cuts strategies and monarchs – so why not embassies?

Britain and Canada are to pool diplomatic premises abroad. Kim Sengupta reports

Britain and Canada will set up joint missions abroad and share embassies in a new "diplomatic alliance" which is also likely to include Australia and New Zealand in the future.

The initiative has reportedly been presented by UK government sources as a Commonwealth counterweight to the rise of the European Union as a "foreign superpower".

The blog Tory Diary reinforced this message: the move, it said, "will seek to head off the creeping influence of European Union diplomats".

The statements reportedly made by officials may have been intended to bolster Foreign Secretary William Hague's Eurosceptic credentials, but they have also led to puzzlement in diplomatic circles. The scheme appears to be based on an established embassy-sharing arrangement which has served Britain well for the past 16 years – with Germany as the partner.

When the sharing of the premises started in Reykjavik, the Foreign Office was keen to announce: "It is probably the first time a building was constructed to house two embassies." The German acceptance of the UK's request to share was a relief to London – the cost was considerably over-budget.

Mr Hague, said yesterday: "As the Prime Minister said when addressing the Canadian parliament last year: 'We are two nations, but under one Queen and united by one set of values.'

"We have stood shoulder to shoulder from the great wars of the last century to fighting terrorists in Afghanistan and supporting Arab Spring nations. We are first cousins. So it is natural that we look to link up our embassies with Canada's in places where that suits both countries. It will give us a bigger reach abroad for our businesses and people for less cost."

A British official said others would be asked to join the alliance to balance against the EU's expanding European External Action Service. Mr Hague, he added, "hopes Australia and New Zealand will join the initiative whereby the four countries will pool their resources to extend their combined influence on world affairs".

Officials in New Zealand were unaware of a new initiative. The office of the Minister of Foreign Affairs said: "We already co-locate with the UK in Kabul and have had positive discussions about co-location elsewhere."

The 'other' special relationship

* Canada fought alongside Britain in both world wars right from the start. When Churchill emphasised the importance of the "special relationship", it wasn't just the United States he was talking about. "We should not abandon our special relationship with the United States and Canada," he declared.

* Other parts of the Commonwealth have abolished the Queen's position as head of state, yet Canada has not. Last year Canada hosted the first official overseas trip by Prince William and the Duchess of Cambridge, reinstated the "Royal" into the names of the Canadian Navy and Air Force, and ordered portraits of the Queen to be given more prominence at embassies.

* Canada has given Britain some of its best sports stars. Greg Rusedski and Owen Hargreaves are Canadian-born, and silver medal-winning Paralympian Stefanie Reid grew up in Canada; all switched allegiance to Britain.

* Britain is aping Canada's austerity blueprint. Known as the "bloodbath budget", the radical Canadian spending cuts were aimed at resolving the Canadian debt crisis of 1994.