PRIOR to becoming UK Labour leader in 2020, Keir Starmer was the party’s spokesperson on Brexit from 2016 to 2019, and supported a second referendum to potentially allow the United Kingdom to rejoin the EU. However, as prime minister he has rejected this option, seeking instead a better Brexit deal than was agreed in 2020 by ex-premier Boris Johnson, a development that business is watching closely.
This key topic will be the focus for Starmer when he meets European Commission President Ursula von der Leyen on Wednesday (Oct 2) in Brussels. Both sides know that there is a potentially once-in-a-decade window of opportunity in 2025 for a significant renegotiation of the 2020 Trade and Co-operation Agreement.
Since assuming power in London in July, Starmer has met several key European leaders, including French President Emmanuel Macron, German Chancellor Olaf Scholz and Italian Prime Minister Giorgia Meloni. On Wednesday, he will also meet President of the European Council Charles Michel, and President of the European Parliament Roberta Metsola.
As he seeks to reshape UK relations with the 27 member bloc, more than four years after the United Kingdom formally left it, he said recently: “I want to ensure that we’ve got a closer trading relationship if we can… I’m not going to pretend it’s easy, but I think it’s possible. This is the beginning of quite a long process.”
While the specifics of the 2025 renegotiation are not yet fully clear, there are key building blocks on the UK government’s agenda. This is, short, of rejoining either the Single Market or Customs Union, both of which Starmer has ruled out.
Key elements of a potential new deal include London possibly signing up to the so-called Brussels “rule book” in certain sectors, including chemicals. This would see closer alignment with EU rules.
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For instance, for companies trading chemicals in and between the United Kingdom and the EU, closer regulatory alignment will mean fewer differences in safety standards. Since Brexit, the EU has added more than 30 chemicals to its Substances of Very High Concern list, while the United Kingdom has not added any, leading to different regulatory requirements.
This divergence results in the need for separate product registrations and compliance processes in each market. More alignment will eliminate the need for duplicate registrations, streamline regulatory compliance, yielding a more harmonised approach to chemical safety regulations.
So the new UK government might be agreeable to being more of a rule taker in established industries such as chemicals. However, it prefers to retain more post-Brexit regulatory flexibility in emerging technologies such as artificial intelligence.
Another building block that might be part of a revised deal is a so-called “veterinary agreement” to reduce trade barriers on agrifoods. There is also the possibility of greater UK-EU mutual recognition of professional qualifications, given the benefits this could have for financial services. There may also be a deal to reduce paperwork for touring musicians, cultural performers and artists.
One potentially pressing issue is the possibility of a youth mobility deal, covering some or all people under 30. The EU has prioritised this issue, but Starmer may prefer any such agreement to be part of a wider 2025 “grand bargain” between London and Brussels. He is acutely aware of the need that any such mobility deal might well be criticised by UK Brexiteers who slammed the immigration issue of EU-style free movement of people in the 2016 referendum.
Beyond these issues, one of the huge emissions in the 2020 Brexit deal is lack of any agreement in external areas such as defence and security. Starmer has said “that needs to be done, and can be done in a closer relationship with the EU”.
This underlines the huge political sensitivity in the United Kingdom of the Brexit renegotiation ahead in coming months. Indeed, one of the major paradoxes of the UK general election campaign earlier this year is the absence of discussion on Brexit.
One reason Labour is not talking much publicly about Brexit is the continuing concern in the party about this issue. It led to its 2019 landslide defeat when Johnson won a mandate to formally take the United Kingdom out of the EU in 2020. However, Brexit has also divided the political right in the 2020s, given the widespread perception that the United Kingdom has not prospered since leaving the EU.
Take the example of Reform UK Party leader Nigel Farage, who co-led the Leave campaign in the 2016 referendum. He sensationally declared that “Brexit has failed”. His argument, and that of a growing number of other Leavers, is that Conservative prime ministers after 2016 – including Johnson – failed to take advantage of what they perceive as the significant freedoms of Brexit. That included diverging much more economically from the EU to try to drive UK competitive advantage.
While a significant number of opinion polls now indicate that the UK public will support rejoining the EU, a key challenge for such advocates of EU membership today is that the terms of entry will probably be different from those on which the United Kingdom exited the club in 2020. Over time, London negotiated in the 1980s, 1990s and 2000s, a series of opt-outs as part of its EU membership that would no longer be collectively available – including the eurozone single currency.
It is unclear that a majority could be secured for such revised terms of membership in any referendum that might be required to ratify potential UK membership in the future. Growing support for the EU since 2016 is wide, including in the ruling Scottish National Party in the Holyrood legislature in Edinburgh, but may be shallow.
So Starmer is trying to reshape the centre of debate away from “Leave versus Remain” towards how best to try to make Brexit work. What is now becoming clearer is that the 2020 deal created significant trade problems.
The EU got much of what it wanted from the 2020 agreement – including a zero tariff, zero quota deal for goods in which it runs a surplus with the United Kingdom. Meanwhile, Brussels gave away little on services which is a key UK strength. The longer the agreement remains unchanged, the more economic activity may potentially migrate given that the 2020 deal puts the United Kingdom at disadvantage vis a vis competitors inside the single market.
The stakes in play are therefore big. In 2025, a new more constructive UK-EU partnership may bring benefits for both sides, potentially during a second Donald Trump presidency in the United States, at a time of geopolitical flux.
The writer is an associate at LSE IDEAS at the London School of Economics
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Publish date : 2024-10-01 14:00:00
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