The United Kingdom and the European Union are taking steps toward improving their strained relationship.
Early in 2025, UK Prime Minister Keir Starmer will attend an informal summit with EU leaders, which will be the first such invitation since Brexit negotiations concluded in 2020.
This meeting will focus on defence and security cooperation as Europe faces multiple global challenges.
With both the UK and Europe economies currently struggling to re-find their footing, perhaps a revisit on their relationship could provide more benefits than drawbacks for them.
What is driving the renewed engagement?
Geopolitical instability has highlighted shared interests between the UK and EU.
Wars in Ukraine and the Middle East, alongside rising tensions involving China and North Korea, pose threats to regional security.
Additionally, Donald Trump’s return to the White House raises concerns over NATO’s reliability and new trade tariffs.
Brexit left the EU without one of its largest economies and strongest militaries.
For the UK, stepping away from the EU reduced its influence on the global stage.
Labour’s government, elected in mid-2024, sees improved EU relations as a way to address key domestic challenges like migration, economic recovery, and defense policy.
Labour’s plan for an “ambitious reset”
Labour’s foreign policy agenda prioritises EU relations, with Prime Minister Starmer promising an “ambitious reset.”
Key ministers have engaged in active diplomacy. Chancellor Rachel Reeves addressed EU finance ministers, while Foreign Secretary David Lammy met with his EU counterparts.
Starmer himself visited Brussels to meet European Commission President Ursula von der Leyen.
These efforts aim to integrate the UK into broader European goals without reopening contentious Brexit issues.
Starmer’s government seeks collaboration in areas like cross-border trade and energy security while maintaining regulatory autonomy.
What’s at stake economically?
The UK economy has faced significant challenges since Labour took office.
Between July and September 2024, GDP growth stagnated, according to the Office for National Statistics.
The CEBR projects the UK will remain the world’s sixth-largest economy by 2039, but its short-term outlook remains weak.
Labour’s tax policies, including a £25 billion increase in National Insurance contributions, have drawn criticism for potentially slowing economic recovery.
Despite these challenges, the UK’s performance may outpace European peers like Germany and France over the next 15 years.
The CEBR expects Germany’s economy to shrink relative to the UK’s, with the gap narrowing from 31% to 20% by 2039.
Similarly, the UK is predicted to be 25% larger than France by the same year.
The Labour government has also focused on stimulating growth through planning reforms and public investment.
Initiatives to increase housebuilding and modernize infrastructure aim to tackle long-standing structural inefficiencies within the UK economy.
Security and defense: a common priority
Defense cooperation is central to the reset. Europe’s security landscape has changed dramatically over the past couple of years.
Russia’s war in Ukraine continues, supported by nations like Iran and North Korea.
For both the UK and EU, strengthening military partnerships is essential.
The UK remains one of Europe’s few military powers capable of significant international deployment. This makes it a vital partner for EU-led security initiatives.
Starmer’s attendance at the February summit signals the UK’s willingness to contribute to collective defense efforts, especially as NATO’s future appears uncertain.
The role of regulatory reform
Labour is also targeting regulatory hurdles to boost economic growth.
The government has asked regulators like Ofgem, Ofwat, and the FCA for reform proposals by January.
These reforms aim to create a “pro-growth” environment while respecting the independence of regulatory bodies.
Starmer has criticized excessive bureaucracy, calling it a barrier to investment.
In a speech to international investors, he pledged to remove outdated regulations that hinder economic activity.
However, critics argue that some rules viewed as obstacles are necessary for market stability.
Public opinion and freedom of movement
Polling suggests that citizens in both the UK and EU are more enthusiastic about strengthening ties than their governments.
A recent YouGov and Datapraxis poll for the European Council on Foreign Relations revealed that 50% of UK respondents see closer engagement with the EU as the best way to boost the economy, and 68% favor reintroducing freedom of movement in exchange for access to the single market.
Similarly, majorities in Germany and Poland support offering the UK special access to the single market to deepen security cooperation.
While the Labour government insists it will not return to free movement or the single market, sectoral agreements offer a middle ground.
For example, youth mobility schemes could allow 18-30-year-olds to work or study across the Channel.
The UK might accept this in exchange for practical gains, such as mutual recognition of professional qualifications or easier mobility for UK entertainers and artists.
Additionally, fishing rights negotiations could also serve as bargaining chips, tied to securing economic benefits like streamlined food trade agreements.
Why is a UK-EU reset important?
The UK-EU reset brings both opportunities and risks with it.
On one hand, closer ties could help both sides address shared challenges, from trade barriers to geopolitical instability.
Improved cooperation might also benefit the UK’s economic recovery and bolster the EU’s global influence.
On the other hand, there are limits to how far either side is willing to compromise.
The UK is unlikely to rejoin the single market or customs union, while the EU may be hesitant to grant significant concessions on trade or migration.
Labour’s push for an EU “reset” is closely tied to its domestic agenda.
Delivering economic growth, managing migration, and improving public services all depend, to varying degrees, on the success of these negotiations.
However, Labour faces political risks at home, including skepticism from Brexit supporters who may view any concessions to the EU as a betrayal.
Labour’s task here is difficult as it needs to frame any compromises as wins for British interests while also avoiding backlash from voters resistant to perceived EU influence.
Action over rhetoric
Despite the goodwill on both sides, meaningful progress requires clear priorities and a willingness to compromise.
The EU’s skepticism about the UK’s intentions and the Labour government’s hesitancy to fully articulate trade-offs could stall negotiations.
For the “reset” to succeed, both sides must move beyond symbolic gestures to deliver tangible benefits in trade, defence, and energy cooperation.
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