A crucial week in UK-EU relations

It is nearly 10 years since the unfortunate Brexit referendum of June 2016, which unexpectedly, and by a very narrow margin, led to the UK’s departure from the EU. One of the great follies of those who “designed” that referendum — driven in large part by complacency and arrogance — was the assumption that no rational nation would vote to abandon one of the most successful political experiments in modern history.
Voters were asked to give a simple yes-or-no answer — remain or leave — as if there could be a simple either/or response to such a complex relationship which would affect the lives of every UK citizen across multiple issues. The EU may not be faultless, but it served the British economy and society well for decades, since the UK joined the European Economic Community in 1973.
This week has seen a flurry of activity that could determine, between now and July, when an EU-UK summit is expected, the future nature of relations between the union of 27 countries and its former member. Britain’s current Labour government came into office in July 2024 promising to “reset” the UK’s relationship with the EU. However, in the best tradition of election pledges, it was rich in aspiration but notably sparse on detail, sidestepping many difficult questions.
For EU leaders, on whom the entire Brexit debacle was imposed against their will, there is a clear expectation that this reset should reach at least an initial conclusion before the summit, allowing them to turn their attention to pressing internal challenges and mounting external threats, from Russia and China to the conflict in Iran.
The irony is that leading figures in the current government, including Prime Minister Keir Starmer, Chancellor Rachel Reeves, and Foreign Secretary Yvette Cooper, opposed Brexit. First, they found themselves on the losing side of the argument and now must deal with its consequences, including not only the fact of leaving the EU, but also the damaging manner in which it was carried out: a combination of a half-baked agreement and lingering bitterness in Brussels toward London.
Matters are further complicated in the UK by the rise of the Reform Party, effectively a continuation of the Leave campaign by parliamentary means. Its growing influence deeply concerns the government, prompting caution not to provoke its leader, Nigel Farage, and others opposed to any perceived “backdoor” return to the EU. As a result, Labour has set firm red lines: no return to the customs union, no return to the single market, and no return to freedom of movement constraints that inevitably limit what a “reset” could achieve in practice.
At the same time, the government has been unusually candid in acknowledging the economic damage caused by Brexit. 

The UK can mitigate the negative effects of Brexit by showing greater flexibility.

Yossi Mekelberg

In her keynote Mais Lecture in London this week, Chancellor Reeves identified a deeper relationship with the EU as one of the three key drivers of economic opportunity in the decade ahead, alongside nationwide growth, and advances in AI and innovation. She also noted that plans to reintegrate the UK into European energy markets, as part of the post-Brexit reset, could help reduce energy costs. Reeves has previously argued that Brexit has been more damaging than even its critics anticipated, citing estimates that the long-term hit to the UK economy could amount to around 8 percent of GDP.
However, words are not enough. It is the government’s responsibility to begin undoing the damage of Brexit, starting by loosening the self-imposed constraints of its “three Nos,” which strike at the heart of what defines the EU. This cannot happen overnight or without careful negotiation, but it must be the direction of travel. A government that recognizes the source of harm to its country yet lacks the courage to address its root causes is failing in its duty.
In a detailed analysis, economists Andrew Sissons and John Springford argue that “the sectors in which the UK excels — finance and business services, tech, the creative economy, and advanced manufacturing niches — depend on openness: to trade, ideas, and skilled workers.” This is precisely where Brexit has inflicted the greatest damage, not only on the economy, but also on society and the UK’s capacity to respond to domestic and international challenges. The government must be both bold and honest with the public: prosperity depends on close ties with immediate neighbors. While a full return to EU membership is not imminent, meaningful progress will require concessions, including on the freer movement of people.
Ultimately, immigration and free movement have come to play an outsized role in British politics, to the point of influencing electoral outcomes. Yet economic stagnation and declining public services — driven in part by years of underinvestment — have been the deeper causes of public discontent. Freedom of movement has not created these problems; rather, it has exposed longstanding structural weaknesses.
The UK is unlikely to rejoin the EU any time soon, but it can mitigate the negative effects of Brexit by showing greater flexibility. In Brussels, there is growing frustration that London seeks many of the benefits of close alignment with the world’s largest trading bloc — one that shares its liberal, democratic values and faces similar challenges — without accepting the accompanying obligations.
One current stumbling block in resetting UK-EU relations concerns tuition fees for European students at British universities. The UK wants them to pay overseas rates, often up to six times higher than domestic fees. Yet many UK universities are struggling to attract students, and for many Europeans these higher costs make studying elsewhere a more viable option. The result is a loss of income for higher education, fewer opportunities to attract talented young Europeans, and the risk of long-term decline in one of the UK’s most globally respected sectors.
There are numerous areas in which the reset of UK-EU relations remains incomplete. What was built over decades was dismantled abruptly, and rebuilding it will take time, goodwill, and compromise. Many of the advantages of EU membership were deeply embedded and disappeared overnight. However, given the current government’s strong European instincts, it should act on them. The rewards may not be immediate, in terms of public opinion or in sections of the media, but they will become evident to the country in time, including when voters next go to the polls.

• Yossi Mekelberg is professor of international relations and an associate fellow of the MENA Program at Chatham House.
X: @YMekelberg