Brexit was always a stupid idea, but the UK’s referendum rejection of EU membership in 2016 was also spectacularly badly timed.
Stupid, because disrupting trade with your main trading partner, the continent on your doorstep, is inevitably costly, as Brexit supporters who supposedly believed in free trade ought to have recognised.
And spectacularly badly timed, because Brexiteers envisaged post-Brexit Britain embracing the US and a free-trading – and peaceful – global future. But then Donald Trump and Vladimir Putin had other ideas.
Now, a decade after the referendum, and six years since the UK finally left the EU, the new geopolitical threats provide a compelling case for closer cooperation.
The political context in the UK is more promising too. Public support for Brexit has plunged as its economic costs have become clear. And the EU-phobic Conservative government has been replaced by a pro-European Labour one.
“We want to be more ambitious,” Prime Minister Keir Starmer said on 1 April. “Closer economic cooperation, closer security cooperation, a partnership that recognises our shared values, our shared interest and our shared future. A partnership for the dangerous world that we must navigate together.”
What, then, are the prospects for a rapprochement?
Stronger together
The case for closer cooperation is simply put. In the face of new geopolitical and economic threats, both the EU and the UK are increasingly vulnerable – and would be more secure and prosperous together than apart.
War rages in Ukraine and Putin’s Russia menaces the rest of Europe too, while Trump threatens to quit NATO, covets Greenland and bashes European countries for failing to sufficiently support his Iran war. Meanwhile, the US president also lashes out at America’s traditional allies with tariffs and other economic threats, while his war in the Gulf provokes an energy crisis that is sparking inflation and depressing economic growth. In the words of an old Flemish proverb often misattributed to Benjamin Franklin, “we must all hang together, or we shall all hang separately.”
The good news is that EU-UK relations have indeed improved. The hostility and mistrust of recent years have been replaced with warm and positive language.
“Diplomatically there’s been a substantial reset,” Anand Menon, director of the think tank UK in a Changing Europe, tells The Brussels Times.
Fabian Zuleeg, the chief executive of the European Policy Centre (EPC), a Brussels-based think tank, concurs. “We’re now in a better place than we’ve been since the whole Brexit process started,” he says.
There has been practical progress too. At the EU-UK summit in London last May, a “common understanding” set out plans for closer cooperation in many areas. The UK has since rejoined the EU’s Erasmus+ student exchange programme. Another summit is due this year, as is a review of the Trade and Co-operation Agreement (TCA), as the UK’s EU exit deal is formally known.
Talks are already underway on deepening integration in four areas: food standards, electricity, emissions trading and youth mobility. In order to facilitate food and farm trade, the UK wishes to align with EU sanitary and phytosanitary (SPS) standards. It is also keen to rejoin the EU electricity market. And to avoid the EU’s carbon border tax, the UK wants to link its domestic emissions trading scheme (ETS) to the EU’s.
The EU, meanwhile, is seeking an expansive youth-mobility scheme that would allow young people from both sides to live, study and work abroad for a few years – including, controversially, permitting EU students to pay the lower fees at UK universities that local students are charged.
Perhaps most importantly, there is much closer co-operation on defence, notably on the critical issues of Ukraine and Russia. This mostly takes place within the framework of the E3, which brings together Europe’s three biggest powers: Germany, France and the UK. Both Germany and France have also signed new bilateral treaties with Britain, while the latter two, Europe’s only nuclear-armed powers, have agreed to deepen their nuclear cooperation.
A new EU-UK security and defence partnership was also announced last May. But since then, cooperation has hit a roadblock. The UK wanted to participate in Security Action for Europe (SAFE), the EU’s new €150 billion defence-procurement programme. This would have enabled UK defence companies, which are major players in the European market, to win SAFE-funded contracts, thereby also bolstering EU states’ security.
But at France’s insistence, the upfront cost of participating in SAFE was pitched prohibitively high, while the EU rejected the UK’s very low counteroffer. As a result, the UK is not participating in SAFE for now.
Meanwhile, progress on economic cooperation remains meagre. Even if agreements were reached in the four areas mentioned above, they would constitute small steps forward, not a big leap ahead.
Political and practical challenges
Several practical and political hurdles are impeding more substantial progress.
One obstacle is that the EU is broadly satisfied with its existing trade deal with the UK, and has more pressing priorities than trying to deepen their economic ties.
As well as Ukraine, defence and trying to protect itself against a possible far-right victory in France’s presidential elections next year, the EU is embroiled in difficult negotiations about the next multi-annual financial framework (MFF), the ugly jargon for the next 2028–34 EU budget. In that context, negotiating side deals with the UK is an added complication.
For sure, both the EU and the UK are keen to revitalise sluggish economic growth, especially now the Iran war is depressing it further. Boosting two-way trade therefore ought to be a win-win.
But whereas for the UK, closer economic ties with the EU could be crucial, trade with the UK matters much less to the EU. While UK exports of goods and services to the EU were nearly 13% of GDP in 2024, EU sales to the UK were only 3.5% of GDP. Brexit has cost the UK economy perhaps 4% of GDP, maybe much more, while the cost to the EU has been minimal.
While both sides are seeking alternatives to the US market in the wake of Trump’s tariff onslaught, the EU is keener to strike new deals than to renegotiate its existing one with the UK. It has recently reached an agreement with Brazil and the three other South American countries in Mercosur, as well as ones with India, Indonesia and Australia.
“The EU is being strategic and diversifying its trading relationships,” Mujtaba Rahman, Europe director at Eurasia Group, a political-risk consultancy, told The Brussels Times. “The problem is, the UK doesn’t matter that much.”
Another obstacle to deepening EU-UK economic ties is that both sides remain hamstrung by narrow political constraints. “Both are transactional in their approach to the relationship, and miss the bigger picture,” says Ian Bond, deputy director of the Centre for European Reform, a think tank with offices in London, Brussels and Berlin.
The EU does not want the UK economy to strengthen so much that Brexit could be construed as a success. For sure, the UK’s dismal exit experience has deterred most other nationalists from wanting to leave the EU; they mostly now favour capturing EU institutions to create a looser EU of nations instead.
Yet embattled mainstream politicians still worry, rightly or wrongly, that perceived UK success could be a recruiting sergeant for nationalists. Especially ahead of the crucial French elections next year, the EU does not want to add fuel to the populist fire.
Moreover, the EU is reluctant to give the UK special treatment, as epitomised by its mantra during the Brexit negotiations of “no cherry picking”.
In essence, this asserts that participation in the EU single market is an all-or-nothing deal. All four freedoms of the single market – for goods, services, capital and labour – are deemed indivisible (although in practice the single market is incomplete). Nor can the UK enjoy the rights and benefits of EU membership without the corresponding obligations – notably, that single-market participation also requires contributions to the EU budget and accepting the jurisdiction of the European Court of Justice (ECJ).
The EU also rejected piecemeal deals for specific sectors, such as financial services, and more broadly a Swiss-style relationship involving a patchwork of regularly renegotiated sectoral agreements similar to those Brussels has with Bern.
Fortunately, the EU is now a bit more flexible. After all, the negotiations on food standards, electricity and the ETS all do involve cherry picking. Indeed, according to Pedro Serrano, the EU’s ambassador in London, that well-worn phrase is “no longer helpful.” As he said last May, “This is not about cherry picking or not cherry picking. We have identified a number of issues that are of mutual interest.”
For now, though, the scope of these areas of “mutual interest” remains limited. Moreover, it seems likely to remain so, not least because of the UK’s own political constraints.
Starmer’s government remains hemmed in by Labour’s election-manifesto red lines: no return to the single market, a customs union or freedom of movement. Indeed, such is its allergy to free movement that even the proposed youth-mobility scheme is contentious: the UK wants a tight cap on visas and to limit them to only two years.
Like one of his Conservative predecessors, Boris Johnson, Starmer also wants to have his cake and eat it. For instance, the UK is resisting contributing to the EU’s cohesion budget as the price of rejoining its electricity market. In effect, Menon says, the UK is “looking for something like Switzerland enjoys without the obligations the Swiss have”.
“It’s not a Swiss model, it’s a UK model,” insists Nick Thomas-Symonds, UK minister for EU relations. “It’ll be bespoke, unique to us.”
More broadly, even with a US president as unreliable and threatening as Trump, the UK doesn’t want to have to choose between the US and the EU. “The UK is still clinging to this idea that we can be as close to the US as we are to the EU, and that we can avoid choices,” Menon says.
“Starmer has so far managed to ride both horses simultaneously, but I suspect they are going to ride off in different directions and it’s going to be very painful.”
In short, while EU-UK relations have greatly improved, big hurdles remain.
Shifting sands
What, then, might break this deadlock?
One possibility is a big pro-EU shift in the UK position. Starmer’s government has a huge 167-seat parliamentary majority, but his position has been weakened by political U-turns, poor polling numbers, catastrophic errors of judgement and a glaring lack of strategy and communication skills.
Given strong support for closer EU ties among Labour MPs on whom his survival as prime minister depends, Starmer’s vulnerability is pushing him towards a more pro-EU stance. In particular, he is keen on progressive integration into the single market through “dynamic alignment” in sectors such as chemicals and pharmaceuticals.
In effect, this would entail accepting that, like Norway, the UK would be a rule-taker that implements new EU regulations that it has no say in shaping, as it is proposing to do with EU food standards.
However, given the prospect that Starmer might soon be ousted as prime minister, the EU is reluctant to expend political capital on him. “The EU prefers to wait and see,” Rahman argues.
Instead of closer integration with the single market, plausible replacements for Starmer such as former deputy prime minister Angela Rayner and health secretary Wes Streeting have proposed forming a customs union with the EU.
This might be easier in terms of domestic politics, since it would not require big contributions to the EU budget or accepting freedom of movement. But it would be trickier internationally, since it would force the UK to renegotiate its trade deals with other countries, notably the US.
But in any case, given Labour’s red lines, any big shift would likely come only in its next manifesto – and only be implemented if Labour wins the next election, which must be held by 2029.
On the EU side, the prospect that if Reform UK maintains its polling lead arch-Brexiteer Nigel Farage could become prime minister after the next election and ditch any new EU-UK deal is also an impediment to bold moves before 2029.
“The UK’s problem is that member states may not want to offer the UK a better deal if they think a Reform UK government will tear it up in a few years; but the economic effect of the absence of such a deal may make a Reform victory more likely,” the CER’s Bond points out.
Eventually the EU’s position may evolve, however. It is seeking to fast-track Ukraine’s entry into the Union by offering it a form of associate membership. While formally this is a special case, it also sets a precedent that could be applied elsewhere if there is political will.
More broadly, in the wake of Trump’s rupture of both the global order and the Western alliance, the EU is looking at ways to cooperate more closely with allies such as Canada, which in turn could prompt fresh thinking about institutional flexibility.
“I think what we’re going to have is something rather messy,” Zuleeg argues. “Different solutions in different policy areas, with different constellations, sometimes very close to the European Union, sometimes looking like the European Union but not actually part of the treaties, and coalitions of the willing, also involving countries like Canada. A tapestry of different relationships, different ways of integrating,” notably in the security field.
The biggest catalyst for change could be an even greater sense of common threat – if Trump follows through on his recent threats to quit NATO, for instance. The collapse of the US-led global order and the return of war to the European continent arguably ought to be sufficient to prompt a re-evaluation of priorities on both sides. But for now, “the sense of threat is not big enough to overcome prejudices on both sides,” Menon says. So, “we’re in a relatively stable equilibrium in terms of the framework that governs EU-UK relations.”
Regrettably, this seems correct for now. “There hasn’t been a strategic discussion on either side on the underlying issue of how we protect liberal democracy from the forces that are trying to destroy it, and how the EU-UK relationship fits into that,” Zuleeg observes. “And I think ultimately, when you look at it from a UK perspective, if you cannot rely on the transatlantic relationship any more, not being a member of the European Union simply does not make sense.”
For now, though, rejoining the EU is not on the UK agenda, even if Labour wins a second term. “I don’t think they’re brave enough,” Rahman says. “I don’t think any of the leadership contenders have got the ambition, or the requisite leadership skills and vision.”
That is very sad – and short-sighted.
