By Joël Reland, Senior Researcher, UK in a Changing Europe.
Keir Starmer’s new year interview with the BBC’s Laura Kuenssberg has led to a flurry of headlines about his ambitions for closer ties to the EU single market. The Prime Minister provided an unusually forthright articulation of his belief that alignment with single market rules is economically beneficial, and that he would like to go further than the limited set of plans already in train.
The strength of his tone, coupled with a willingness to wade into some of the policy detail (arguing that more single market alignment is preferable to a customs union, as it allows the UK to maintain an independent trade policy) suggests that some genuine thinking might be taking place in No. 10 about how the government can take its EU ‘reset’ further.
But the problem is that, while the UK might be changing its outlook on the relationship, the EU is not. There is little chance of Brussels allowing the UK to ‘cherry pick’ further access to the single market sector-by-sector, in the manner Starmer laid out. His proposal sounds like yet another case of Brexit wishful thinking from a UK Prime Minister.
To understand why, we should be clear about the exact case that Starmer is making. It is not about rejoining the single market outright. He is instead arguing for “closer alignment with the single market” – which has in effect been Labour’s policy for the best part of eighteen months.
Alignment with the single market – in this context – means being bound by EU regulations in certain areas, with little-to-no say over them, in exchange for smoother trade in those sectors (in terms of reduced administration). This is exactly what the proposed UK-EU agreements on ‘SPS’ (animal and plant health) and electricity – which the two sides committed to negotiate at last May’s UK-EU summit – provide for.
The significance in Starmer’s comments was his explicit desire to “go further”, by looking “issue-by-issue, sector-by-sector” at other areas of potential alignment. The government has up to now been coy about its plans for longer-term EU relations, insisting that its focus is on delivering the handful of commitments made at last May’s summit – but Starmer’s comments suggest he is not satisfied with the new status quo.
His team might see the next summit, set for an as-yet-unconfirmed date in 2026, as a launchpad for negotiations on a new set of alignment deals granting the UK privileged access to the single market in further sectors – for example professional qualifications (to aid services trade), conformity assessments(to help manufactured goods), medicines or chemicals.
But the rather significant problem with all this is that such agreements are unlikely to be on offer from Brussels. While Starmer might see such deals as in the UK “national interest”, the EU will be unwilling to let the UK continuously ‘cherry pick’ its access to the single market without the countervailing responsibilities of an EU member state – namely paying into the EU budget and accepting the free of movement people. Starmer made emphatically clear to Kuenssberg that free movement remains a red line he will not cross.
The Commission was willing to countenance a limited degree of cherry picking over SPS and electricity because there were obvious self-interested reasons for it do so; the SPS deal should significantly aid the functioning of the Windsor Framework in Northern Ireland, while UK electricity supplies are a key component of the EU’s energy security.
But there are clear limits to its flexibility. The Commission will not allow the UK to endlessly pick and choose the best economic benefits of the single market, without having the economic and legal obligations of full membership, as it risks leading to member states asking for similar treatment. It is telling that some member states are already insisting that UK budget payments are a necessary price for an agreement on electricity.
And the Commission is also acutely aware of its relationship with Switzerland, which has aligned itself to the single market across a much wider range of areas than the UK (industrial goods, agrifood, electricity, air and land transport) but – crucially – pays into the EU budget and accepts freedom of movement. The UK cannot be seen to be getting a preferential deal.
Switzerland is the closest proxy for the type of relationship the UK has with the EU – not in the single market or customs union, but with a degree of integration into the single market (TBC in the UK’s case) based on alignment of regulations in certain sectors. Switzerland has, however, gone much further down that path, providing a useful indication of the trade-offs the Prime Minister will face if he does indeed want greater alignment with the single market.
The choice is clear. He can either accept the position the UK now finds itself in, negotiating a few deals on regulatory alignment which will add an estimated 0.3% to UK GDP by 2040 . Or he can push for deeper integration across a wider range of sectors, delivering more significant economic benefits, if he is willing to accept freedom of movement and make bigger financial contributions.
The Prime Minister’s rhetoric on Brexit may be getting bolder, but the inherent trade-offs remain exactly the same.
Joël Reland is a Senior Researcher at the UK in a Changing Europe.
