UK Government Wants ‘Reset’ with EU

The Prime Minister has stated the UK's intent to “reset” its relationship with the European Union but not reverse Brexit. Speaking at a joint press conference with German Chancellor Olaf Scholz in Berlin, Keir Starmer emphasised that while his government will build a closer partnership with Europe in areas such as defence and the economy, there are no plans to rejoin the single market or customs union.

New Agreement

The announcement follows recent discussions between the UK and Germany aimed at strengthening ties between the two nations. An agreement, expected to cover a range of business sectors, could be formalised by early next year. Both leaders also announced a joint plan to combat illegal migration and human trafficking by enhancing intelligence-sharing.

The German Chancellor welcomed the initiative to reset UK-EU relations, noting that the UK remains "an indispensable partner" despite Brexit. The proposed treaty is expected to strengthen trade, create jobs and foster economic growth in both countries.

The PM clarified that a closer relationship with the EU would not mean the introduction of a ‘youth mobility scheme’, which would permit young EU citizens to live and work in the UK and vice versa. The EU previously proposed a similar scheme to facilitate temporary work and study opportunities. However, Starmer confirmed that this was not on the UK's agenda.

The Labour Party has, in the past, expressed a desire to renegotiate some aspects of the Brexit trade deal, mainly to ease border checks on food products, reduce paperwork for touring musicians and bolster the mutual recognition of professional qualifications. These adjustments aim to reduce the friction many industries have faced since the UK departed from the EU. However, it remains to be seen whether the EU would be open to amending the existing Brexit deal, due for review in 2026.

Implications for UK Businesses

For small business owners in the UK, the Government's approach to renewing relations with the EU holds potential benefits and uncertainties. On the positive side, any agreement that simplifies trade and cuts through red tape could lead to smoother operations, particularly for businesses that export goods. Labour's focus on easing border checks and paperwork could reduce costs and delays, making it easier for SMEs to thrive post-Brexit.

However, the Government's reluctance to engage in a youth mobility scheme could create challenges. This could mean a continued talent shortage for industries reliant on young, skilled workers from the EU. On the other hand, businesses could benefit from a more stable labour market if immigration policies focus on attracting specific skills rather than broadening access.

The ongoing uncertainty about whether the EU will entertain changes to the Brexit trade deal leaves SMEs waiting. While the proposed review in 2026 may present opportunities, companies must continue to muddle through the current complexities of UK-EU trade in the meantime.

In Summary

While Keir Starmer's efforts to reset UK-EU relations could offer some relief to small businesses through improved trade conditions, the absence of clear strategies and uncertainty surrounding future negotiations may temper expectations.

Business owners must stay informed as the Government continues redefining its post-Brexit relationship with Europe.

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