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The BREXIT marked a historic first. A Member State left the EU’s Single Market, Customs Union, and all Union policies for the first time. This monumental shift led to the EU-UK Withdrawal Agreement. This agreement marked a new chapter in UK-EU relations, overseen by the von der Leyen Commission. It established a new relationship between the two entities in December 2020 under the von der Leyen Commission.
As the mood around UK-EU relations improves, there is a unique chance to reset these ties. After years of tension and mistrust, both parties can seize the opportunity. So, increased engagement between the UK and the EU is essential. Utilising existing structures like the TCA Specialised Committees can help. Regular UK-EU summits would also be beneficial. The UK’s participation in the new European Political Community is a positive step forward.
In This Guide
Economic Relationships
The EU serves as a crucial trading partner for the UK. Even after Brexit, the UK officially left the EU’s single market and customs union, but the economic ties between the two are still strong. About half of UK trade is with the EU, showing how much the EU matters to the UK’s economy. This trade relationship concerns the amount traded and the complex supply chains connecting many UK businesses to the EU market.
The UK government says Brexit lets the country control trade and immigration policies. But the evidence shows otherwise.
The UK’s economy has slowed, and its trade growth is behind other countries. This shows that Brexit’s economic benefits have yet to fully manifest.
The UK’s economy relies heavily on trade, and the EU is a major part of this. But, it faces challenges from new trade barriers and rules imposed by leaving the EU. Its manufacturing and agriculture businesses are closely connected to EU supply chains. Since Brexit, there have been more checks at the border. This has made trading across borders more complicated and costly. This may explain the slower trade growth and the extra challenges UK exporters and importers face.
It’s not just business. The EU market also provides jobs in the UK tied to export activities. These jobs usually pay more than jobs in other industries. Trading goods from other countries helps the UK grow and compete economically. So, there’s an absolute need for maintaining smooth trade relations with the EU. It’s not just an economic concern but also a key issue for employment and wages.
Political Relations
Brexit debates and decisions have deeply influenced political relations between the UK and the EU. It is further complicated by varying public and political support for Brexit policies. The Conservative Party strongly supported Brexit and suffered a humiliating defeat in the July 4, 2024 general elections. The Labour Party, winning 412 of 650 seats, saw Keir Starmer become the new UK prime minister.
Previously, the Conservative leadership has largely avoided detailed discussions on trade relations with the EU. Instead, they focused on promoting free trade agreements and internal trade mechanisms. This stance reflects the party’s broader strategy, emphasising the sovereignty gained from Brexit while minimising further alignment with the EU.
The Labour Party has formed a new government, but it has been cautious in its approach to EU relations. It has always advocated for improved relations with the EU but ruled out rejoining the union. The union often offered the Single Market, customs union, and the free labour movement. The party’s proposed approach includes a more measured stance on free trade agreements. It consists of a commitment to developing a comprehensive trade strategy. But this Labour’s proposals have been criticised for lacking detailed policy on the UK’s future trade relationship with the EU.
It’s not rocket science. Both parties were reluctant to address trade with the EU directly. The Conservatives’ in-depth discussion of the EU could have undermined their position. It would have highlighted the challenges and shortcomings of Brexit, which they pushed for. The Labour Party, on the other hand, faced its own challenges of balancing its stance on Brexit with the need to address trade and economic issues. So, they had to choose a middle ground that did not alienate its base or appear to undermine the 2016 referendum’s outcome.
Political fragmentation across Europe has not helped, either. Government sides have lost elections, not just in the UK but also in Italy, France, Germany, and Belgium. These are key countries in the EU, but liberals and greens have suffered the heaviest defeats to the far right, particularly in Paris and Berlin.
Current and Future Prospects
Looking ahead, the political and economic relationship between the EU and Britain will continue to evolve. The immediate impact of Brexit has created a period of adjustment. Policymakers must craft policies that align with the new realities. But the relations will depend on many things, among them political realignments, economic performance, and public sentiment.
Europe is at a critical point, and the next five years will be the most important in the union’s relationship with the UK. On the other hand, if progressives keep challenging the far right and successfully improve people’s lives, 2024 could be a turning point.
One key area for future consideration is the potential for deeper economic integration with the EU. There may be increased public and political pressure to revisit this matter. It could include discussions about rejoining the Single Market or closer trade agreements. The evolving political landscape will play a significant role in shaping these discussions.
Another important aspect is the need for comprehensive trade policies. These policies must address free trade and other critical areas like climate change and international cooperation. Neither of the UK parties fully addressed these broader aspects of trade policy in their manifestos. Essentially, this could be the space for the subsequent development and debate.
Read about Global Economic Recovery after Pandemia in our other guide.
Final Thoughts
The UK and the EU are major trade partners, sharing most of the trade fracture. But Brexit complicated their relationship in a tight corner. The parties need well-defined trade policies and political strategies for their future economic success. The UK must carefully consider and tackle the main issues in trade and political relations with the EU. Both UK political parties must create clear and detailed plans to handle these challenges. The UK’s economy relies heavily on its relationship with the EU for a stable and prosperous future.