UK and EU look to 2025 as a year of reset but with little room for trade-offs

In early 2025, Prime Minister Sir Keir Starmer was invited to attend an informal summit of EU leaders. It is the first such invitation to the UK since the bitter days of Brexit negotiations.

The February meeting will focus on future security and defense cooperation. Background: The volatile state of the world from Europe's perspective.

Wars are raging in the Middle East and Europe – aided by Iran, North Korea and China in Russia's attack on Ukraine.

Adding to the uncertainty that haunts this continent is that Donald Trump is preparing to return to the White House.

He threatens Western cohesion with his pledge to impose punitive tariffs on imports — a major concern for the EU and the UK — and potentially withdraw from NATO, the transatlantic defense alliance that Europeans have relied on for security since its founding after World War II. .

These threats to security and trade revenues have helped remind the EU and the UK of the common values ​​they share in unpredictable times.

The European Union felt weakened by Brexit in 2016. It meant the loss of a major economy and its only significant military force except France.

As for the post-Brexit UK, now freed from the rules of EU membership, it is also now a much smaller power on the world stage.

Closer to home, the Labor government has recognized that Europe is key to delivering on a number of priority commitments to the people of the UK.

“The economy, defence, immigration… there is a European element in all of this, which makes relations with the EU important to the government's whole agenda,” says Mark Leonard, the foreign secretary. “The things that will make this government successful are linked to Europe.” Director of the European Council on Foreign Relations.

Labor has repeatedly promised an “ambitious reset” of EU-UK relations.

There has been a lot of shuttle diplomacy and symbolism since she won the general election in the summer.

Foreign Secretary David Lammy attended a meeting of European Union foreign ministers, Chancellor Rachel Reeves delivered a speech at a summit of EU finance ministers, and the Prime Minister headed to Brussels to meet with European Commission President Ursula von der Leyen.

But what does this “reset” really mean? What can we expect in 2025?

Will the UK government allow some freedom of movement in exchange for economic benefits on EU trade?

An EU-UK summit is scheduled to take place in the spring, and a number of high-level political figures and diplomats from EU member states and the UK spoke to me on condition of anonymity before the start of bilateral negotiations.

I kept hearing about the “tremendous amount of good will” in the EU towards the new Labor government with repeated “reset” enthusiasm.

At the same time, there is a clear note of Brussels' skepticism that a Labor government would do well to take into account, if it wants to see tangible results.

One EU figure told me: “There is a lot of space. There is an appetite in Europe for closer relations with the United Kingdom.”

“What is less clear is what London really cares about – and what trade-offs it is willing to make to get there. This is key and seems to have not bottomed out in London yet.”

The defense and security arrangements I mentioned constitute the “low-hanging fruit” when it comes to resetting EU-UK relations.

It is relatively easy to formalize what is already happening: cooperation on Russian sanctions for example, as well as discussions – already taking place within NATO – on military and defense capabilities and how to better protect Europe against cyberattacks and attacks on key installations. Such as the energy infrastructure in the North Sea.

It is seen as a win-win agreement.

There is no proposal to make the defense agreement legally binding.

The Labor government need not worry here about being seen – by the political opposition or those who voted to leave in the UK – as trying to “roll back Brexit”. She is sensitive about this possible accusation.

But Labor also made promises on trade and the economy: to “make Brexit work” and “tear down” trade barriers imposed by Brexit. The Office for Budget Responsibility believes Brexit will cost the UK economy 4% of GDP in the long term.

Labor wants to avoid this, but this is not as simple as it may seem.

EU figures say they are confused by the UK government's announcement of an “ambitious” reset while insisting on maintaining restrictive red lines after Brexit.

A recent working paper outlining EU interests noted that there were “limited economic gains on offer” due to the UK ruling out a return to the EU customs union, single market or accepting free movement of people.

Some in the EU suspect that the UK government believes it can get a trade-for-defence quid pro quo. That's what they say, it will never happen.

“The UK is wrong if it thinks it can use the defense agreement as a back door to get good trade deals with us,” one EU diplomat told me.

“For us, it's like being in a weird tug of war. With the devil on one shoulder of the EU and the angel on the other. In terms of values, there is more that unites us than divides us with the UK.

“The EU wants to take action to bring the UK closer, but on the other hand, we cannot get rid of the technicalities that form the basis of the EU. We cannot make special deals, even if that limits the relationship.” With the United Kingdom.”

In order to see a significant improvement in economic relations, both sides will have to make concessions.

In Brussels, there is no desire to tear up the TCA – the already existing trade agreement between the EU and the UK. But you sense the European Union's openness to start negotiations on various economic sectors simultaneously.

“We can walk and chew gum at the same time,” one EU diplomat insisted.

There is also recognition on the UK side that sectoral agreements may include alignment with EU rules in those sectors.

The key to any compromise Labor might make regarding the EU going forward is: can they sell the result at home as a win for the British people?

The EU will push hard for long-term fishing rights in UK waters.

It also wants a youth mobility scheme, which would allow young people aged between 18 and 30 to work and/or study in the UK or EU for up to three years, and pay local fees at university if they choose the study option.

The UK government insists there will be no return to free movement with the EU.

Immigration is a hot-button issue. But it is worth noting that Labor has not explicitly ruled out the youth scheme. They just said they had “no plans” to do so.

With regard to youth mobility, the assumption is that more EU young people will benefit from the mobility scheme than UK nationals due to language barriers.

But the UK government may use openness to the mobility scheme requested by the EU and/or the Fishing Agreement as a means of negotiating something important to UK interests, such as mutual recognition of professional qualifications, facilitating cross-Channel business, or cross-Channel mobility of businesses. British artists and performers travel to the European Union.

Both matters were listed in Labour's election manifesto as priorities if the party entered government.

Labor also wants to press ahead with a veterinary agreement with the EU to reduce barriers to trade in food and agricultural products. This requires UK compliance with EU animal and plant health rules.

Both the European Union and the United Kingdom are interested in improving cooperation and coordination in the field of energy and climate.

Sir Keir also described this as a priority.

Linking carbon emissions trading schemes, as the EU does with a number of other countries, means the UK avoids the effects of the EU Carbon Border Adjustment Mechanism (CBAM) – a cost that UK businesses fear.

Removing barriers to the electricity market after Brexit would deliver €44bn (£36bn) in savings to EU and UK consumers by 2040 and reduce investment costs in wind power in the North Sea by 16%, according to the company. Paringa Business Consulting.

The North Sea basin includes the United Kingdom, in addition to the European Union member states Belgium, Denmark, Germany, the Netherlands, and Norway, a member of the single market. It is one of the most promising regions in the world for offshore wind energy.

On illegal immigration, the EU says it is open to cooperating more closely with the UK. It wants the UK to crack down on people working illegally in the country.

France complains that the ease with which it says illegal immigrants can disappear and earn a living is a major attraction for economic migrants to the UK.

The European Union ruled out that the United Kingdom would be able to return migrants who arrived illegally to its shores on small boats, to the European Union countries from which they departed.

Whatever developments in EU-UK relations in 2025 and beyond are likely to happen slowly due to political concerns and because negotiations usually get bogged down in detail.

In direct contrast, a recent poll by YouGov and Datapraxis for the European Council on Foreign Relations suggests that voters in the EU and UK are far more enthusiastic than leaders in Brussels and London about jumping over previous political taboos to strengthen ties.

The survey found that around half of those surveyed in the UK believe greater engagement with the EU is the best way to boost the UK's economy (50%), enhance its security (53%) and manage immigration effectively (58%).

When asked who the UK government should prioritize relations with, 50% chose Europe and only 17% chose the United States.

68% of respondents in Britain see a benefit in reintroducing freedom of movement across the Channels in exchange for access to the European single market.

The desire to cooperate, and the willingness to abandon previous red lines, is mutual in Europe.

A majority of voters in Poland (54%) and Germany (53%) – and the prevailing view in Spain (43%), Italy (42%) and France (41%) – believe that the EU should give the UK special access to certain parts of the European market Unified to secure a closer relationship based on security.

Geopolitical threats and uncertainties appear to be dramatically changing public opinion. Will the UK and EU political class choose to go along with it?