Ahead of a European trip to Berlin and Paris, Prime Minister Keir Starmer promised to repair the “broken relationships left by the previous government” and drive forward Britain's economic growth.
Changing the tone with European leaders is easy. Changing the content, especially finding new deals that will boost growth, is a much harder task.
Starmer reiterated in Berlin on Wednesday that economic growth is the “first mission of my government” but he is not the first prime minister to feel his economic ambitions are being hampered by self-imposed red lines on Europe. Labour has ruled out rejoining the EU's single market and customs union, the steps that would have the biggest impact on improving trade with the EU.
Instead, the Labour manifesto promised to remove “unnecessary barriers to trade” by negotiating a veterinary agreement with the EU, improving access for touring artists to the continent, and striking a mutual recognition agreement for professionals. Such policies amount to “tinkering on the fringes of the relationship” and will do little to “address the ongoing economic impact of Brexit,” concludes a recent report from the think tank UKice (UKice).
Meanwhile, the Office for Budget Responsibility, a group of independent economists, said its forecast of a 15% fall in trade as a result of Brexit was “broadly on track”. Researchers at UKice predict that the veterinary deal would increase UK agri-food exports by 22.5%, which would be a lifeline for some small businesses but not decisive for the wider economy.
Labour hopes that it can deepen economic ties without joining EU institutions: for example, Chancellor of the Exchequer Rachel Reeves has proposed a “bespoke” deal for the chemicals industry to avoid an extra £2 billion in costs, mainly linked to overlapping EU requirements.
Talk of bespoke deals raises a spectre that has dogged Brexit negotiations: the issue of Britain enjoying the benefits of the single market while avoiding common EU rules, enforcement and budgetary payments. “People will soon rediscover that there are reasons to cross the line,” a senior EU official told the Guardian. “What we don't want is for the single market to be fragmented. The UK is good at negotiating and they always want to cherry pick.”
Following talks on Wednesday morning, the governments of Prime Minister Keir Starmer and Chancellor Olaf Scholz issued a “Joint Declaration on Deepening and Strengthening the UK-Germany Relationship”. Photo: Justin Tallis/AP
Still, officials do not foresee the kind of major discrepancies in expectations that plagued the early days of Brexit negotiations under Theresa May. Mr. Starmer is well known in the EU capital, having visited Brussels frequently while he was Jeremy Corbyn's shadow Brexit secretary. Mr. Starmer and his team are “well advised,” the official said. “They know what is achievable and what is not achievable.”
An EU diplomat from one large member state expressed concern that the British government was not being honest with British voters about EU demands: “The UK has to be honest with its people. We are not a shelf from which you can pick things,” the diplomats said.
The EU has been disappointed by Labour's indifferent response to a proposed youth mobility scheme that would allow 18-30 year-olds to work, live, study and travel for up to four years. Nils Schmidt, foreign affairs spokesman for Olaf Scholz's Social Democrats in the German Bundestag, told BBC Radio 4's Today programme that a youth mobility scheme was “a key item on our wish list” but “it's not about immigration in a general sense”.
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But when answering a parliamentary question about the plans in July, Starmer said in general terms that “we are not going back to freedom of movement.” In Berlin, however, he took a more nuanced approach and appeared to open the door to some kind of youth mobility programme.
The previous outright rejection had dismayed the EU, especially with its repeated conflation of time-limited youth mobility schemes with the free movement of people that is a lifelong right for EU citizens. An EU diplomat expressed dismay that Labour had “summarily rejected it because it looks like free movement, but it is not free movement at all.” The person added: “I am personally surprised that they think it is harmful when[the UK]has a similar arrangement to other countries,” referring to the UK-Australia deal.
Starmer's government will also face other demands from the EU. France, Belgium, the Netherlands, Denmark and other coastal states want post-Brexit fishing rights to be extended beyond June 2026, when the current arrangements expire.
Meanwhile, the European Commission, concerned about the rights of an estimated 3.5 million EU citizens living in the UK, has argued that Britain must fully implement existing agreements before negotiating a new one. Late last month, the commission announced it was pursuing a lawsuit launched in 2020 alleging the British government had failed to protect EU citizens in the UK. “We have two big agreements with the UK and we want them to be implemented,” a second EU diplomat said, referring to the Brexit Withdrawal Agreement and the subsequent Trade and Cooperation Agreement.
Starmer is due to meet European Commission President Ursula von der Leyen soon, and a UK-EU summit is planned for spring 2025, but the British government still has work to do to repair relationships that have been broken in the past.
