23 September 2024

UK TPO's Holmes: Keir Starmer has several Brexit fixes he can try, and he shouldn’t let his ‘red lines’ get in the way.

In recent weeks Sir Keir Starmer has visited Germany, France, Ireland and Italy, each in the name, he says, of turning a corner on Brexit, resetting the UK’s relationship with Europe and – most importantly – raising economic growth. The OBR estimates Brexit costs the UK 4% of GDP pa.

The OBR estimates Brexit in its current form to be costing the UK a permanent non recoverable 4% of GDP pa.

So far, the PM’s visits to the EU have been good symbolism. Recent UK opinion polling shows increased public support for building back closer ties with the EU, reflecting that there are many in the UK, including a growing contingent of “Bregretters”, who would like to repair the economic and political damage done since 2016. On the European side the optics of welcome have been decently warm, although perhaps this is not so very surprising after almost ten years of dealing with EU-shy Conservative governments.

However, it is quite striking that, at the time of writing, Starmer has not yet made a visit to Brussels. He may be waiting for Ursula von der Leyen to launch her second term Commission. However, his absence to date has been noted at the Berlaymont and his immediate rebuff of an EU proposal for a youth mobility scheme went down badly. EU officials are reported to be asking how serious about a Brexit reset he really is. There is doubt he has a clear strategy beyond his “red lines”^[1].

While the new Commission awaits final confirmation, the UK has a breathing space which it can use to clarify its own strategy. But by the time the new Commission starts to plan its five-year agenda, in early 2025, the UK needs to have put together a clear proposal for the EU to react to. To be good enough to deliver an economic upturn for Britain, it will have to be more than just a few cherry-picked ideas and restatement of what the UK doesn’t want.

But even as he enthused about a bilateral deal with Germany on his Berlin trip, Starmer doubled down on his red lines of “no single market”, “no customs union” and “no rejoining the EU within his lifetime”. If he intends to stick to these red lines, he may find they hinder his goal to boost the UK economy, a point also made by the Resolution Foundation.^[2]

EU officials have always insisted that the first requirement for improved relations with the UK would be a renewal of trust, and a willingness by the UK to adhere to the commitments it made in Boris Johnson’s 2020 hurried and flawed “get Brexit done” deal – the treaty formally known as the Trade & Co-operation Agreement (TCA).

The TCA is due for its first 5 yearly review in 2026. Although the EU has repeatedly made clear that they do not want to review the body of this agreement, the treaty does contain provisions for modifying some of its rules without modifying the treaty itself or making a new one. For example, the TCA Title X provides for “Regulatory Co-operation” which would allow UK and EU regulators to discuss and agree potential areas of joint interest, with a fairly open-ended agenda, and it includes concrete provisions for cars, aviation and medicines in annexes. They could then extend the models in other areas. Similarly, the UK-EU Joint Partnership Council which oversees the treaty can agree to change the rules of origin, and has already done so for electric vehicles.

Mini-deals

Ahead of the 2026 review the EU has made it clear that the original Barnier red line of “no cherry-picking” no longer apply.  Side agreements or “mini-deals” can be signed at any time. Their youth mobility proposal[3], for now declined, was a mini-deal and they have also proposed an SPS ^[4] mini-deal which would allow meat, fruit and vegetables and flowers to move between the UK and the EU more quickly. To get recognition of our food safety rules we need to make binding commitments to total equivalence, (including  how we check  third country imports). The British ambition of a comprehensive agreement on Mutual Recognition on Conformity Assessment is unrealistic. Piece by piece might work, including rejoining EU regulatory agencies as associates, eg EFSA and EASA.^[5] There is scope for the signature of new UK-EU mini-deals on a range of topics including carbon pricing, aerospace and mutual recognition of professional qualifications. These could require formal endorsement by the Council of Ministers and even possibly the European Parliament, but they are a key avenue to explore. The UK government is placing its hopes in a deal on defence and security, which, although contrary to the Conservatives’ views, Labour hopes will have the broadest economic security dimension....

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