How (Not) To Reset Brexit

There are six negotiating traps that history suggests Starmer must avoid. Has he already fallen into all of them. Why so much political pain for so little gain? What's the best way forward?

Photo by Annie Spratt on Unsplash

The starting gun on Labour’s great Brexit reset has been fired and there is no backing away now. Rachel Reeves got the ball rolling in Brussels this week when she became the first chancellor of the exchequer since Brexit to attend a meeting for eurozone finance ministers. Sir Keir Starmer has been invited to attend a dinner of with EU leaders in Brussels in February, when an EU-UK defence pact may be announced. Preparations are underway for an EU-UK summit in the first half of next year when negotiations on a closer trading relationship will begin.

It is evidence of Starmer’s seriousness that he is reviving the role of “EU sherpa”, vacant since Brexit, to lead the negotiations. The job comes with a salary of up to £200,000 and a team of more than 100 officials. The frontrunner is Michael Ellam, a highly-regarded former Treasury official who is being lured back from HSBC. His task will be to secure an ambitious deal while sticking to Starmer’s red lines of no return to the customs union, single market or free movement. To which one can only say good luck with that and ask what could possibly go wrong?

If history is any guide, the answer is rather a lot actually.

Brave, prime minister

The first prime minister to stake his fortunes on a reset with Europe was Harold Macmillan. His 1963 bid to join the European Communities ended in a French snub that arguably cost him his job. Harold Wilson suffered a similar rebuff in 1967, which helped turn his bruised party eurosceptic. Edward Heath did succeed in resetting relations when he negotiated Britain’s entry to the EC in 1972, but for this towering political achievement which underpinned more than four decades of prosperity, he received little credit either from contemporaries or posterity.

Margaret Thatcher got rather more credit for getting “our money back”, but John Major’s reward for securing opt-outs from parts of the Maastricht Treaty was the undying hostility of half of his party. That proved the high point for reset success. Dilettante David Cameron launched two EU negotiations in 2011 and 2015 both of which ended in abject humiliation. Theresa May took up the challenge of recasting a 43-year relationship torn asunder by the 2016 referendum but failed utterly. Fantasist Boris Johnson claimed to know the way to the sunlit uplands but ended up doing a deal that he previously said no British prime minister could possibly contemplate and then lied to the British public about it.

That said, we are all now living with the consequences of Johnson’s dire deal and it is hardly surprising that Starmer believes he can do better. He has made growth his central mission, yet the Office for Budget Responsibility reckons that Brexit will reduce productivity by four percent and trade by 15 percent relative to having remained in the EU. The Resolution Foundation notes that UK trade in goods has risen by just 0.3 percent per year since 2019, compared to an OECD average of 4.2 percent. The Centre for Inclusive Trade Policy calculates that Johnson’s deal has cost Britain’s agri-food sector £3 billion in lost exports every year. The broad consensus is that Brexit has cost Britain up to five percent of GDP.

Barely a day has passed since Johnson’s deal came into force in 2021 without some new horror story emerging of the costs inflicted on one sector or another. This week alone, we learned that the introduction of the EU’s new General Product Safety Regulations will impose yet more costs on UK exporters, hitting small businesses particularly hard, while the water industry has warned that a lack of domestic testing facilities means that tap water quality can no longer be assured. Needless to say, the benefits of Brexit remain elusive to the point of non-existence.

Indeed, as previously noted here, Johnson’s Brexit deal is so bad that Starmer will have his work cut out simply to stop the situation getting worse. There are many areas of the UK-EU relationship that have not yet been finally settled or that are subject to transitional arrangements or subject to review. As Andrew Duff, a former British member of the European Parliament, notes in a new paper for the European Policy Centre, a Brussels-based think-tank:

Negotiations are still ongoing on Gibraltar, citizens’ rights, the UK’s border management, the Windsor Framework of the Northern Ireland Protocol, and the EU’s system of electronic travel authorisation. Provisional arrangements are due to expire over the next three years in the fields of data adequacy, equivalence rules for the City of London’s clearing houses, the imposition of the EU’s Carbon Border Adjustment Mechanism (CBAM), fisheries, and trading in energy. They need replacing.

Beware the Six Traps

Nonetheless, one might think that before embarking on such a perilous path, Labour would have taken the trouble to learn the lessons of history. One of the reasons that UK-EU negotiations over the decades have proved so fractious and ended in failure and recriminations is that governments have consistently fallen into one or all of a number of traps. Here are six lessons from past “resets”: