The prime minister’s very notable tilt on the UK’s ties to the European Union post-Brexit on Saturday was designed to send a message to business, to Brussels and to other European capitals, as well as his backbenchers.
Closer post-Brexit economic relations are now expected to be looked at as part of an annual process of bilateral talks rather than just at this year’s formal review of the UK-EU deal.
It was Downing Street’s answer to political questions about a more ambitious Brexit reset involving rejoining the customs union with the EU.
Some Labour backbenchers, union leaders and cabinet ministers have joined calls crystallised by Lib Dem moves in Parliament last year that led to a non-binding vote.
Sir Keir Starmer gave a clear answer to my colleague Laura Kuenssberg that this was not the priority at the moment, as it goes against what he considers one of the successes of the past year: the signing of best-in-class deals on trade with the US and India, with more to come in the Middle East.
Instead of the customs union, his focus is on a “closer relationship” with the single market, which would not mean ripping up those new trade deals elsewhere.
“We are better looking to the single market rather than the customs union for our further alignment,” Sir Keir said.
When the UK formally left the EU in January 2021, Boris Johnson’s deal stressed freedom from EU regulations rather than frictionless trade for British exporters across Europe.
Already, Sir Keir’s “Brexit reset” envisages realigning with EU rules in three areas to help the free flow of trade: food and farm exports, electricity, and emissions trading.
The British Chambers of Commerce last month published a list of further requests in other sectors to help exporters deal with post-Brexit red tape that has hit the trade of goods.
It reported a majority of 989 business members in its own survey agreed that the UK-EU trade deal was not helping sales growth.
A number of other areas could, feasibly, see a similar approach – alignment with single market rules – in exchange for reducing post Brexit barriers across manufacturing, in automotive, chemicals, or for example in arrangements for VAT.
European capitals were underwhelmed by the lack of ambition in last year’s reset, with the British rejection of some experts who floated the idea of the virtual readmission of British goods to the single market.
The detail of arrangements on electricity, and food and farm standards is yet to be finalised. A plan for UK manufacturers to be part of the €150bn (£131bn) Security Action For Europe defence loan fund has stalled over the size of the membership fee, after some objections from France. Canada has joined the scheme.
The UK has agreed a deal to rejoin the Erasmus university exchange and further negotiate a youth jobs scheme. This has helped clear the way for further UK-EU talks.
Some UK insiders say the publication of the US National Security Strategy (NSS) last month has also changed the context on UK relations with Europe.
The NSS said the US would “cultivate resistance to Europe’s current trajectory within European nations” and praised the “growing influence of patriotic European parties”.
In Downing Street, there is some recognition that even this rapidly changing world has changed again.
Domestically, too, Labour expect to be outflanked on Brexit not just by the Liberal Democrats, but also the Green Party, which is targeting Labour’s London heartlands in council elections in May.
The prime minister’s words yesterday are borne of a confluence of economics, politics and geopolitics as the UK starts a year that will mark the 10th anniversary of the Brexit referendum.
