Labour Considers EU Customs Union Re-entry Amidst Internal Debate and Economic Prospects
Informal discussions within the UK government are exploring the possibility of rejoining the EU customs union as a potential lever for economic growth, with analysis by the House of Commons estimating a possible GDP increase of around 2.2%. Nick Thomas-Symonds has been promoted to full cabinet rank and is anticipated to advocate for closer ties with the EU, although any significant shift would require approval from Prime Minister Keir Starmer.
Despite Starmer's longstanding red lines against rejoining the customs union, recent statements suggest an interest in closer relations with the EU, yet no formal strategy has been established. Pro-EU Labour ministers, including David Lammy, Mike Kane, Rebecca Kendall, Rachel Phillipson, and Wes Streeting, reportedly support closer engagement with the EU. Shadow Chancellor Rachel Reeves has highlighted the costs associated with Brexit and discussed a deeper reset of the UK-EU relationship as a potential policy direction.
Negotiations on other key issues have faced challenges, with talks over the EU’s £131 billion defense fund collapsing following France's demand for the UK to contribute £5.7 billion. Discussions concerning food exports and energy markets also remain stalled.
Prime Minister Starmer has hinted at moving beyond the previously agreed May reset deal towards a closer trading relationship with the EU. However, officials indicate that any progress would likely stop short of fully rejoining the customs union and would be approached iteratively during spring negotiations.
Re-entering the customs union would necessitate the UK relinquishing its independent trade policy and tariff-setting autonomy. Furthermore, skepticism from the EU, alongside complex domestic political dynamics in France and Germany, pose significant challenges to any prospective path to rejoin the customs union.
