Five years since Brexit: the future of EU-UK relations still haunt the government

Blink and you could have missed the reference to the Brexit reset in Rachel Reeves’s big growth kickstart speech. Sandwiched between a paean to the special relationship with the US and a (very) long list of new infrastructure projects, the chancellor promised to be “pragmatic” about the challenges but also “ambitious” in the goals for the much vaunted reset – and that changes would be prioritised that were consistent with Labour’s manifesto. The UK’s relationship with EU barely got a look in. 

The UK has yet to draw a line under Brexit

On the fifth anniversary of the UK leaving the political institutions of the EU (and just over four since the Trade and Cooperation Agreement replaced membership as the framework for economic relations), the UK has not yet drawn a line under Brexit. The political turbulence that followed the referendum on 23 June 2016 – repeated government defeats, unprecedented ministerial and prime ministerial churn, fraught relations between Westminster and the devolved governments, government and the courts at loggerheads, long-established conventions being tossed aside – has abated. 

But the immediate economic consequences continue to reverberate. Smaller businesses in particular are finding it harder to cope with the burdens of exporting to the EU, other firms face additional compliance costs, sectors which depended on EU labour find it harder or more expensive to recruit and the political instability and economic uncertainty make the UK a less attractive destination for foreign investment. Even so, the impacts of Brexit was a subject most politicians avoided in the 2024 election, in sharp contrast to the single issue focus in 2019.

The government is already showing more signs of pragmatism

The government’s promise to renegotiate Boris Johnson’s botched Brexit deal to reduce the economic cost is one of the three legs of the government new approach designed, as Cabinet Office minister Nick Thomas-Symonds said this week, to deliver cooperation which promotes “security, safety and prosperity”. 

On security, expectations have been raised about some sort of enhanced security cooperation with the EU – though it is not yet clear whether that will go any further than more talking. However, next week Keir Starmer will become the first UK prime minister in five years to attend a meeting of EU leaders. 

On safety, the government is looking to cooperate with EU members to secure the UK’s borders and to act jointly to reduce irregular migration. There have already been measures to improve collaboration against people smugglers. 

The economic reset so far has been characterised by coyness. The Labour manifesto made some limited suggestions – on a veterinary (SPS) deal, help for touring artists and a move to mutual recognition of professional qualifications, and the chancellor herself suggested some selective alignment on regulation. However, until the New Year the government made no concrete proposals (in public at least) while also appearing to have a reflex to bat away any proposal coming from the EU. 

That now seems to be changing. In the last couple of weeks, the government has indicated that it is open to an EU proposal to join the Pan-Euro- Mediterranean Convention, a move which would ease rules of origin requirements for firms with supply chains extending beyond the EU. It has also indicated openness to linking greenhouse gas emissions trading schemes – essential to avoid UK and EU trade being hampered by competing Carbon Border Adjustment Mechanisms. 

The UK seems keen to defuse most potential flashpoints

There have been other UK moves to defuse potential flashpoints. Unionists applied the Stormont Brake to a new EU regulation on chemicals – but the UK government deemed it did not meet the criterion of trade disruption necessary for the UK to take it up with the EU under the Windsor Framework. And the Home Office has – after a very prolonged delay – announced that it will start automatically upgrading EU citizens with pre-settled status to give them permanent settled status. This is a complete 180 degree turn from their initial approach of making them ineligible (and therefore illegal) if they failed to apply to convert by the time they had been in the UK  five years – an approach which was struck down by the courts two years ago. 

And these moves all come alongside the passage of the Product Regulation and Metrology bill which will allow the government to align sotto voce with a swathe of EU rules through delegated legislation where it thinks it is in the UK interests. 

But that does not mean any renegotiation will be easy

The domestic politics in the UK look as though they are changing too. The Liberal Democrats have moved from election shyness to coming out in favour of the UK forming a customs union with the EU – something advocated repeatedly on leading political podcasts. Public opinion on Brexit is shifting ever more decisively into the “mistake” camp. Within Parliament the pressure on the government will be to go further, faster on getting close to the EU – the reverse of the politics that wrecked Theresa May’s premiership. 

But there are already signs that EU member states are waking up to the need to protect their domestic political interests too. There are difficult issues that need to be renegotiated in 2026 irrespective of any reset – not least the ever sensitive if economically trivial issue of fishing rights. Indeed, the EU has taken the UK to the dispute resolution mechanism already over its pro-puffin (but anti-Dane, they claim) ban on sand eel fishing. 

On Wednesday Rachel Reeves sought to pull a bunch of growth levers where previous governments had been thwarted – but for all she sidestepped the question, the UK's economy is inevitably impacted by the future of UK/relations. Five years on from starting to leave the EU, however, the government will find it easier to talk than conclude concrete changes.