UK and EU see 2025 as year of reset but with little room for compromise

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

The February meeting will focus on future cooperation in the field of security and defense. Background: The unstable state of the world from Europe’s perspective.

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

Adding to the uncertainty that haunts the continent, Donald Trump is poised to re-enter the White House.

He is threatening Western cohesion with his promise to impose punitive tariffs on imports – a major concern in the EU and Britain – and potentially withdraw from NATO, the transatlantic defense alliance that Europeans have relied on for security since its inception 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 EU felt weakened after Brexit in 2016. This meant the loss of a large economy and the only significant military power other than France.

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

And closer to home, the Labor government has realized that Europe is key to delivering on a number of priority promises to the British public.

“The economy, defence, migration… there is a European element to all of these, which makes relations with the EU important to the whole government agenda. What will make this government successful is about Europe,” says Mark Leonard, director of the European Council on Foreign Relations.

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

After the general election victory in the summer, there was a lot of shuttle diplomacy and symbolism.

Foreign Secretary David Lammy attended a meeting of EU foreign ministers, Chancellor Rachel Reeves addressed the EU finance ministers’ summit, and the Prime Minister flew to Brussels to meet with EU Commission chief Ursula von der Leyen.

But what does this “reset” actually mean? What to expect in 2025?

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

An EU-UK summit is planned for the spring, and a number of high-level politicians and diplomats from EU member states and the UK spoke to me on condition of anonymity ahead of the bilateral talks.

I kept hearing about the “tremendous amount of goodwill” in the EU towards the new Labor government with its oft-repeated “reboot” enthusiasm.

At the same time, however, there is a distinct note of Brussels skepticism that a Labor government would do well to heed if it wants to see tangible results.

“There is headroom. There is an appetite in Europe for a closer relationship with the UK,” one EU official told me.

What is less clear is what London is really interested in – and what compromises it is willing to make to achieve it. That’s the main thing and it doesn’t seem to have hit rock bottom in London yet.’

The defense and security arrangements I mentioned are the notorious ‘low-hanging fruit’ as far as the EU-UK reset is concerned.

It is relatively easy to formalize what is already happening: for example, cooperation on sanctions against Russia, as well as discussions – already taking place within NATO – about military and defense capabilities and how best to protect Europe from cyber attacks and attacks on key facilities as energy infrastructure in the North Sea.

This is seen as a win-win deal.

And there is no proposal to make the defense pact legally binding.

The Labor government here does not need to worry about the political opposition or those in the UK who voted to leave being perceived as trying to “undo Brexit”. And it is sensitive to this potential charge.

But Labor also pledged on trade and the economy to “make Brexit work” and “tear down” trade barriers introduced by Brexit. The Office for Budget Responsibility estimates that Brexit will cost the UK economy 4% of GDP in the long run.

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

EU figures say they are baffled by the UK government’s announcement of an “ambitious” reset while insisting restrictive red lines remain in place after Brexit.

A recent working paper outlining the EU’s interests says there are “limited economic benefits on offer” from Britain ruling out re-entry into the EU’s customs union or single market or agreeing to the free movement of people.

Some in the EU suspect that the UK government believes it can get a quid pro quo for defense trade. This, as they say, will never happen.

“The UK is wrong to think it can use the defense deal as a backdoor to get sweet deals with us on trade,” an EU diplomat told me.

“It’s like a weird tug-of-war for us. With a devil on one shoulder in the EU and an angel on the other. In terms of values, we have more in common with the UK than we do apart.

“The EU wants to take steps to bring the UK closer together, but on the other hand we cannot get rid of the technicalities that are the basis of the EU. We cannot make special deals, even if it limits relations with Great Britain.’

In order for economic relations to improve significantly, both sides will have to make compromises.

Brussels has no appetite to tear up the TCA, the already existing trade agreement between the EU and the UK. But you see the openness of the EU to start negotiations on different economic sectors at the same time.

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

There is also recognition from the UK that sectoral agreements may need to provide for alignment with EU rules in these sectors.

The key to any compromise Labor might make with the EU going forward will be: can they sell the result at home as a victory for the British public?

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

He also wants a youth mobility scheme that allows 18-30-year-olds to work and/or study in the UK or EU for three years, paying local university fees if they choose the study option.

The UK government insists there will be no return to freedom of movement from the EU.

Migration is a pressing issue. But it should be noted that Labor has clearly not ruled out the youth scheme. They only said they “don’t plan” to go for it.

In terms of youth mobility, it is thought that due to language barriers, more young people from the EU will take advantage of the mobility scheme than UK nationals.

But the UK government could use openness to the EU-requested mobility scheme and/or fisheries agreement as leverage to negotiate something important to UK interests, such as mutual recognition of professional qualifications making it easier to do business across the Channel, or the mobility of British artists and performers will go to the EU.

They were both listed in Labour’s election manifesto as priorities for the party if it gets into government.

Labor also wants to move to a veterinary agreement with the EU to reduce barriers to trade in food and agricultural products. This will require bringing the UK into line with EU rules on animal and plant health.

The EU and the UK are interested in better cooperation and coordination on energy and climate issues.

Sir Keir also called it a priority.

Linking carbon trading schemes, as the EU does with a number of other countries, would mean the UK would avoid the effects of the EU’s Carbon Border Adjustment Mechanism (CBAM) – the costs of which British businesses fear.

And removing lock-ins in the electricity market after Brexit could save EU and UK consumers €44bn (£36bn) by 2040 and reduce the cost of North Sea wind investment by 16%, according to business consultancy Baringa.

The North Sea basin includes the UK plus EU member states Belgium, Denmark, Germany and the Netherlands and single market member Norway. It is one of the most promising regions in the world for offshore energy.

On illegal migration, the EU says it is ready for closer cooperation with the UK. He wants Britain to step up its crackdown on people working illegally in the country.

France complains that the ease with which illegal migrants can disappear and make a living is a major factor in attracting economic migrants to the UK.

The EU has ruled out Britain sending migrants who arrive illegally on its shores in small boats back to the EU countries they came from.

Whatever developments in EU-UK relations in 2025 and beyond are likely to happen slowly because of political problems and because negotiations have a habit of getting bogged down in detail.

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

The survey found that around half of UK respondents believe greater engagement with the EU is the best way to boost the UK economy (50%), strengthen its security (53%) and manage migration effectively (58%).

When asked who the UK government should prioritize relations with, 50% choose Europe and only 17% choose the US.

A huge 68% of respondents in Britain see a benefit in restoring freedom of movement across the English Channel in return for access to the European single market.

The desire to cooperate and the willingness to abandon previous red lines are also reciprocated in Europe.

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

Geopolitical threats and uncertainty seem to be dramatically changing public opinion. Will the UK and EU political class want to keep up?