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

EU figures say they’re confused by the UK government proclaiming an “ambitious” reset while insisting on maintaining restrictive post-Brexit red lines.

A recent working paper setting out EU interests noted there were “limited economic gains on offer” because of the UK ruling out rejoining the EU’s customs union or single market or accepting the free movement of people.

Some in the EU suspect the UK government believes it can get a quid pro quo on trade for defence. That they say, is never going to happen.

“The UK is mistaken if it thinks it can use an agreement on defence as a backdoor to getting sweet deals with us on trade,” an EU diplomat told me.

“For us, it’s like being in a weird tug of war. With the devil on one EU shoulder and an 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 get the UK closer, but on the other hand, we can’t do away with technical minutiae that are the foundation of the EU. We can’t make special deals, even if that limits the relationship with the UK.”

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

In Brussels, there is no appetite to rip up the TCA – the already-existing trade agreement between the EU and UK. But you do detect an EU openness to starting negotiations on different economic sectors simultaneously.

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

There’s also an acknowledgement on the UK side that sectoral agreements might well have to involve aligning with EU rules in those sectors.