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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Sir Keir Starmer’s dinner with EU leaders this week, the first such visit by a UK prime minister since Brexit five years ago, was intended to signal a burgeoning British “reset” with the bloc. Donald Trump’s disruptive return to the White House strengthens the arguments for both sides to bolster ties. Yet the Labour government’s proposals are disappointingly unambitious, and EU demands on fishing rights are creating an early stumbling block. The process risks becoming less of a bold reset and more of a rerun of the grinding exit negotiations of 2017-19. The result could be only a limited improvement on the UK’s existing threadbare deal.
Labour hemmed itself in by adopting the Conservatives’ “red lines” in its election manifesto last year: no return to the EU single market, customs union or freedom of movement. The urge not to scare off Leave supporters is understandable. But it stripped Labour’s pledge to “tear down unnecessary barriers to trade” of any real substance.
Given the urgency to jump-start economic growth, Labour could credibly argue to erase some of its red lines. But no party likes to breach manifesto pledges. And Labour is spooked, like the Tories, by arch-Brexiter Nigel Farage’s Reform party, which this week took the lead in a national opinion poll for the first time.
Failing to deliver on its broader promises, though, could doom Labour’s re-election chances anyway. The government should get back on the front foot with the EU. It should make as bold an offer to its EU partners as it can within its self-imposed limits — in terms of what it seeks in security, trade, energy, climate and regulatory co-operation, and what it might concede.
Some EU states, led by France, are guilty of bogging down talks by tying unrelated issues such as fisheries to progress on the defence and security pact that Starmer had hoped could be an early “win” in talks. But signalling a UK readiness to reach an early deal on fisheries together with a more ambitious approach in other areas could help to unlock progress.
Given Britain’s strong armed forces and defence companies, the UK should push for a wide-ranging security deal that includes defence-industrial co-operation, including in research and development and joint procurement, even if that requires paying into a common pot. The threat from Russia and need to secure a postwar Ukraine argue for the closest possible UK integration into European defence capabilities.
Lifting opposition to a youth mobility deal could also ease the way to broader progress on professional mobility — as Germany has pushed for. It would boost immigration figures that home secretary Yvette Cooper is desperate to cut. The government could sell it, however, as restoring opportunities for UK young people that Brexit curtailed, and rightly argue that since EU visitors would require time-limited visas, this is no return to free movement.
Relinking the UK and EU emission trading schemes and improving access to the EU energy market would be win-win for both sides. Linking carbon pricing schemes, and a veterinary agreement that could cut costs and red tape for the food industry, may both require “dynamic” regulatory alignment — or automatically following EU rules. But the gains would justify compromising on some of the hardline principles that shaped Britain’s original exit deal.
Closer regulatory alignment means giving up potential benefits from divergence. Yet nearly nine years after the Brexit referendum, governments have found few effective ways to exploit these. In an unstable world, floating adrift between the US and EU is an uncomfortable place to be. Britain must do what it can to nurture good relations with Trump’s America. But it makes economic sense to rebuild links, as far as political realities permit, with its nearest and biggest trading partner.
