Reflecting on Brexit after The UK Elections: A Gathering of Minds at the British Parliament

I was pleased to be invited to a recent event hosted by the British Chamber of Commerce in Germany (BCCG) in the House of Lords. It was a remarkable gathering of thought leaders, business experts, and esteemed professionals, all coming together to discuss the evolving landscape of Brexit. It was a pleasure to reconnect with so many friends and colleagues, and the discussions were both enlightening and thought-provoking. Here's a closer look at the highlights of this significant meeting.

Analysing the Impact

During the engaging discussion with Lia van Bekhoven, a highly experienced Dutch journalist, attendees were captivated by her profound insights into the current political landscape. One of the key takeaways from her discourse was the assertion that a Labour government rejoining the EU Single Market and the Customs Union is highly improbable. Through a series of well-founded arguments, she laid out the challenges and obstacles that stand in the way of such a scenario, painting a realistic picture of the political landscape.

Van Bekhoven's nuanced analysis forced the audience to confront the harsh realities of the post-Brexit era, urging them to consider the implications of these decisions on a broader socio-political scale.

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The UK-EU Dynamics After the Elections

Charles Grant, Founder, and Director of the Centre for European Reform, then took the stage to discuss the UK-EU relationship. He presented ten recommendations for Keir Starmer when dealing with Europe. The UK’s approach to relations with the EU will need to take account not only of what Britain wants, but also of what its EU partners are willing to contemplate.

Grant highlighted that while the EU institutions and member states would generally welcome better relations with the UK, improving relations with London will not be a top priority. EU leaders are focused on internal priorities like implementing the Green Deal and preparations for the next seven-year budget starting in 2028. Other significant concerns include Putin’s war on Ukraine, conflicts in the Middle East, and the potential of a Trump presidency in the US.

Overall, key areas of focus for the UK's next government to enhance EU relations include:

Trade

Labour's plans are limited to professional qualifications, visa exemptions for performers, and a veterinary agreement to reduce food product checks. Regulatory alignment with the EU is needed to facilitate trade.

Foreign and Security Policy

There is scope for structured cooperation, building on informal collaboration like the response to Ukraine.

Defence

Greater UK involvement in EU initiatives is possible, though complex negotiations are necessary.

Climate and Energy Cooperation

Mutual benefits can be found, particularly in renewable energy.

Migration

The focus is on combating people-smuggling and reducing irregular migration, though broader immigration policies may be needed for economic growth.

Closer Economic Ties with the EU

The speakers looked at Labour' wish to "reset" the UK's relationship with the EU. By focusing on fostering greater trust and cooperation, Labour aims to create a foundation for mutual understanding and shared objectives between the UK and the EU.

Speakers agreed that the dismantling of unnecessary trade barriers as part of Labour's agenda holds the promise of enhancing trade and investment opportunities between the UK and the EU.

By streamlining regulations and facilitating smoother trade processes, Labor would seek to create a more conducive environment for businesses to thrive and expand their operations across borders. Additionally, the removal of trade barriers can lead to increased market access, promoting economic growth and job creation in both regions.

The speakers, agreed that Labour's vision for a reset in the UK-EU relationship reflects a commitment to promoting stability and prosperity through constructive engagement and pragmatic solutions. By prioritizing cooperation over confrontation, Labour aims to navigate the complexities of Brexit and its aftermath with a focus on building bridges and finding common ground. This approach not only benefits the economies of both the UK and the EU but also sets a positive tone for future collaborations and partnerships in a rapidly evolving global landscape.

The Customs & Global Trade Perspective

Labour's position on customs and global trade, particularly in relation to the EU, reflects a pragmatic approach aimed at improving economic ties without reversing Brexit. Key points include:

No Re-entry into the Single Market or Customs Union

Labour has confirmed that they will not seek readmission to the EU Single Market and Customs Union. Consequently, customs declarations will still be required, and the regulations stipulated in the EU-UK Trade and Cooperation Agreement (TCA) will remain in effect. Nonetheless, Labour intends to enhance the commercial ties by concentrating on particular agreements like a veterinary agreement, a chemicals agreement, and a visa arrangement for business professionals and government officials from the UK and the EU.

Rules of Origin and Customs Declarations

Labour’s strategy involves finding ways to simplify and streamline the process of customs declarations and compliance with rules of origin to reduce the bureaucratic burden on businesses. This includes exploring options to make the rules more business-friendly and potentially negotiating flexibilities within the existing framework of the TCA.

Regulatory Alignment and Cooperation

Labour is open to more regulatory cooperation in key sectors such as automotive, chemicals, and pharmaceuticals. However, achieving significant regulatory alignment may be challenging due to the EU's resistance to "cherry-picking" regulations. Nevertheless, discussing the benefits and concepts of "regulatory alignment" will be essential for reducing frictions and improving trade efficiency.

Trade Disputes and Trust

Labour's more positive attitude towards the EU could help resolve technical trade disputes more effectively, as increased trust between London and Brussels may facilitate smoother negotiations and problem-solving. Reducing bureaucratic red tape and restoring trust between politicians are critical steps for enhancing the business environment.

Economic Considerations

Labour recognizes the economic drawbacks of Brexit, as highlighted by reports indicating a permanent depression in the UK’s GDP. The party may seek incremental steps towards closer economic cooperation with the EU to mitigate these effects over time.

Political Dynamics

Labour's stance is also influenced by the pro-EU sentiment among its voters. This political reality may push Labour towards deeper cooperation with Europe in the longer term, although immediate radical changes in UK-EU relations are unlikely. Labour’s strategy thus balances improving economic ties with maintaining Brexit's key outcomes, aiming for pragmatic solutions that foster cooperation without reversing the fundamental aspects of the UK's current relationship with the EU.

A Dutch Viewpoint

Rem Korteweg, Senior Research Fellow at The Clingendael Institute, provided a fascinating Dutch perspective on the situation. His analysis highlighted how Brexit is perceived from across the Channel and its implications for Dutch-British relations. He discussed how the new Dutch and UK technocratic, "boring" governments have a great chance of collaboration, especially on energy cooperation in the North Sea and security, defense, and economic cooperation. Reducing economic dependencies and enhancing economic export intelligence were also key points, along with addressing differences such as access for Dutch fishermen to UK waters and potential green transnational cooperation.

Closing Reflections

The event came to a poignant end as Alex Altmann took the stage to deliver his closing remarks. He stresses that Labour will not be reapplying to join the EU Single Market and Customs Union, meaning customs declarations and rules of origin under the EU-UK Trade and Cooperation Agreement will persist. Instead, Labour aims to enhance the business relationship by focusing on specific agreements, such as a veterinary agreement, an agreement on chemicals, and a visa deal for business professionals and government officials from the UK and the EU. Labour’s strategy includes ideas to reduce bureaucratic burdens, exploring more regulatory cooperation in key sectors, and fostering greater trust to resolve trade disputes effectively. Recognizing the economic drawbacks of Brexit, Labour seeks incremental steps toward closer economic cooperation with the EU while balancing these improvements with maintaining Brexit's key outcomes. Let's see if Nigel Farage let's them.

My Thoughts

It was truly an enriching and enlightening experience to come together with a diverse and highly knowledgeable group of individuals to engage in a comprehensive discussion on the multifaceted and complex issue of Brexit. The event served as a platform for exchanging valuable insights, perspectives, and ideas, shedding light on the various implications and challenges associated with this significant political development.

Labour has reaffirmed that there will be no reapplication to join the EU Single Market and Customs Union, meaning customs declarations and rules of origin under the EU-UK Trade and Cooperation Agreement will persist. Instead, Labour aims to enhance the business relationship by focusing on specific agreements, such as a veterinary agreement, an agreement on chemicals, and a visa deal for business professionals and government officials from the UK and the EU.

In my view, it is imperative for the business community to take proactive measures in supporting the Labour party in redefining its relationship with Europe.

This collaborative effort must commence promptly to ensure a smooth transition.

A crucial initial phase involves establishing a veterinary agreement with the European Union, which should be followed by the implementation of practical strategies aimed at alleviating the burdensome duties and regulations faced by businesses.

The urgency of this situation is underscored by the looming threat of far-right ideologies gaining prominence within the political landscape.

There is a genuine concern that if left unchecked, figures like Nigel Farage could ascend to the position of Britain's Prime Minister within the next 5 to 10 years, unless the Conservative party adopts similarly extreme stances.

This time frame essentially leaves us with a limited window of five years to enhance the economic environment between the EU and the UK.

Every moment is precious, and we, the EU-UK Business Community, cannot afford to delay any actions that could foster a more stable and prosperous future for both entities.