Starmer and Reeves adopt most pro-EU position since Brexit, betting the politics is on their side
Elevating UK-EU ties has the potential to be a unifying issue on the left of British politics. Analysis of ‘progressive defectors’ from Labour shows that they point to the Brexit vote, rather than issues like migration when asked ‘what’s gone wrong in the country’.
Given that political backdrop, Rachel Reeves used her Mais lecture to make the most pro-EU shift in policy that we’ve seen from a British frontline politician since Brexit, saying that regulatory autonomy for the UK should be ‘the exception, not the norm’, i.e., effectively a shift to seeking dynamic alignment by default.
This is also significant given recent MRP polling from More in Common suggests that Reeves could lose her seat to Reform at the next election. The fact that even the Chancellor has shed her previous caution on talking about Brexit (given the marginality between leave and remain in her constituency and the threat from Reform) should tell us two things: first, her and Starmer believe there’s a necessity in talking up UK-EU ties to hold on to Labour voters and as part of a soft left pivot to prolong Starmer’s survival; second, they think that there’s broader political advantage here.
Polling suggests that there is some political space with the British public. Recent research – again by More in Common – shows strong public support for greater cooperation on defence and security, free movement to live and work in other countries, and only 25% strongly against alignment with EU laws and regulations.
This is why – as anticipated – Starmer wants to put the Brexit reset front and centre of Labour’s legislative plans for the rest of the Parliament. Alongside legislating to enable commitments under the current deal – including the implementation of an agreement on SPS/veterinary – the intention is for the Government to take ‘Henry VIII’ powers to implement Single Market alignment in other areas, without the need for additional legislation.
Number 10 see this as a trap for Reform and the Conservatives. It’s hoped that their opposition would bring back the painful memories among voters from 2016 and force both parties into a position where Labour can pit them against the business community.
But expect Nigel Farage to be savvier this time round, knowing some of the negative public attitudes towards the delivery of Brexit so far. So, for example, don’t be surprised to see Reform adopt ‘case by case’ pragmatism closer to the election on, e.g., SPS/veterinary.
Rhetoric aside, red lines are unchanged as July summit revisits familiar territory
Starmer has clearly stepped up the rhetoric and the UK’s policy positioning in recent weeks. Yet the Prime Minister has also in recent interviews reiterated his commitment to the ‘red lines’ in Labour’s manifesto: no return to freedom of movement, no rejoining the Customs Union, or the Single Market.
That will disappoint many on the Labour side, albeit there’s some evidence that soft-left Labour MPs see the merits in arguing for a ‘Swiss-style’ deal. Post-Starmer, there’s still every chance that the left of British politics coalesces around seeking to rejoin some form of institutional arrangement.
For now, behind the scenes, the run up to the next EU-UK summit (still expected in July) remains familiar.
London and Brussels are focused on reaching an agreement on SPS/veterinary and ETS alignment. Negotiations on the former are well advanced, and the UK has now committed to moving fast on the legislative side. On the ETS, there are still some wrinkles over UK and EU CBAM compatibility, with the UK Government facing pressure from domestic energy-intensive industries over flaws in the UK’s CBAM design and pressure to align with EU practices, e.g., on scope. Meanwhile, the EU is concerned about the UK becoming a backdoor for undertaxed products. But a resolution feels likely.
Agreement on other areas is proving harder to reach. Take discussions on the ‘Youth Experience Scheme’ where Brussels is staunchly resisting the idea of a cap on numbers while calling for any EU students in the UK to pay the same tuition fees as domestic students.
Press reports of an ‘emergency break’ read like we’re back in 2016. But the UK Government will need some ability to set numbers to ensure this doesn’t become a significant political issue.
On tuition fees, our view is that an 11th hour political compromise on the eve of the summit feels likely here. Reducing EU tuition fees to be in line with domestic students would cost universities c.£500m per annum. But the Treasury may be willing to move on a counteroffer where EU students are charged more than domestic, but lower than other international students.
Watch Brussels’ political will and the debate on UK financial contributions for clues on how far this goes
Since last year’s summit, there have been talks on important issues fail to progress.
UK ministers would argue that Brussels over-reached on defence for instance, with a failure to reach a reasonable deal on UK firms’ access to the SAFE mechanism (like the arrangements in place for Canada, for example) seen as an embarrassment given the wider geopolitical context.
It’s possible that the unfolding international environment and increasingly anti-European/NATO noises from Trump force much greater UK-EU collaboration in the defence space. But talk over multilateral funding mechanisms for defence will take time to stand up.
But stepping back, the international turmoil only draws attention to a key limitation on the extent to which EU-UK talks can progress: whether relations with the UK is top of the Brussels’ in-tray and whether concessions now are worth it given the possibility of a Reform government in 2029.
In short, it’s the political will in Brussels that matters. But Starmer’s efforts on the ‘Brexit reset’ are not without significant domestic political risk. Keep a close eye on the European Council’s conclusion that the UK will have to make direct payments into the EU’s cohesion fund to participate in the bloc’s electricity market. This principle – direct UK payments into the EU budget in return for any further alignment – has also been agreed with the Commission.
Mishandled, this has the potential to catch in the UK media and possibly with the public. The focus will grow in advance of July, with the challenging optics of paying to support regional development in the EU at a time of severe public spending pressures.
Conclusion
The direction of travel is clear: Labour is normalising a more openly pro-European posture and betting voters are less attached to Brexit orthodoxy than before. But the gap between political messaging and deliverable outcomes remains significant, with questions over whether an incrementalist approach will be enough for their voters. Plus, the toughest risks may yet come from the optics of what deeper alignment would cost – financially and politically.
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