Ask Onix
EU open to discussing closer UK trade ties, including customs union
Brussels has indicated a willingness to explore deeper trade cooperation with the UK, potentially including a customs union, as global economic instability fuels calls for stronger partnerships. European Commissioner for Finance Valdis Dombrovskis told the BBC the bloc is "ready to engage" if Britain seeks to revisit the idea, which has gained traction among Labour MPs despite the party's manifesto ruling it out.
Key proposals on the table
Dombrovskis outlined several areas where the EU could collaborate with the UK, including:
- Reducing food safety checks between Britain and the EU, contingent on UK alignment with EU sanitary standards.
- Revisiting Britain's participation in the EU's €150 billion defence loans scheme, known as Security Action for Europe (SAFE), after negotiations collapsed last year.
- Discussions on sectoral alignment with the single market, though full membership would require accepting the EU's "four freedoms," including free movement of people.
On a customs union, Dombrovskis said Brussels would approach talks "with an open mind," though he cautioned against premature conclusions. Such an arrangement would eliminate tariffs on goods traded between the UK and EU but would limit Britain's ability to strike independent trade deals, as it would need to adopt the EU's external tariffs and standards.
Labour's stance and political pressure
Labour's election manifesto explicitly ruled out joining the EU's existing customs union or single market. However, the party has faced growing calls from backbench MPs to reconsider, with Justice Secretary David Lammy arguing a customs union could boost economic growth. The Liberal Democrats, who campaigned for such talks, welcomed Dombrovskis's comments as a "significant moment" the government cannot ignore.
"Negotiating a new customs union with the EU is the fastest way to jump-start the UK economy. It is high time that Keir Starmer stopped making excuses and finally started working on a proper new trade deal with our European partners."
Daisy Cooper, Liberal Democrats Treasury spokesperson
High-level talks signal thaw in UK-EU relations
Dombrovskis's remarks followed a meeting in London with UK Chancellor Rachel Reeves and other senior ministers, including European Commissioner for Trade Maroš Šefčovič. The group, dubbed the "Quint" by diplomats, aims to coordinate responses to recent shifts in the global trade and economic landscape. While not a formal negotiation platform, its creation reflects a shared desire to strengthen cooperation amid geopolitical tensions.
Reeves emphasized the UK and EU's "shared values and objectives" on economic, trade, and security issues, stressing the need to "work together and speak with one voice." The talks also covered progress on a youth mobility scheme and a pending food standards agreement, which could eliminate most border checks if the UK aligns with EU rules.
Defence funding and global tensions
One sticking point remains Britain's access to the SAFE defence loans scheme. Under current rules, UK companies can supply only 35% of the value of finished defence products funded by the scheme. Talks on a more favourable deal broke down in November, but Dombrovskis said the EU is "open for further discussions," noting Prime Minister Keir Starmer's interest in revisiting the issue.
The meetings occur against a backdrop of heightened global uncertainty, including recent threats by former US President Donald Trump to impose tariffs on NATO allies and assert control over Greenland. Dombrovskis cited Brussels' firm response to Trump's rhetoric as a turning point, shifting discussions to a "more productive" footing.
"That was clearly unacceptable, and we made it very clear from the EU side, also indicating that we are ready to take countermeasures if necessary."
Valdis Dombrovskis, European Commissioner for Finance
What's next
The UK government has not yet responded to requests for comment on the EU's overtures. The next steps will likely depend on Labour's willingness to revisit its manifesto commitments, particularly as pressure mounts from within the party and opposition groups. Any formal negotiations would require careful balancing of economic benefits against political constraints, including the UK's ability to pursue independent trade policies.
