The Labour government wants to renew trade with Europe. The Tories had failed to do that after Brexit. We take a look back at that last attempt.
Britain’s Prime Minister Keir Starmer faces European Commission President Ursula von der Leyen, right, and European Council President Antonio Costa, left, during a meeting between the UK and the European Union to discuss closer ties in their first official summit since Brexit, in London, 19 May 2025. (AP Photo/Kin Cheung, Pool)
Editor’s note: On 19 May 2025, the British government and leaders of the European Union announced that they had “reset” trade relations that had been severed when the United Kingdom withdrew from the EU in January 2020 because of the Brexit referendum.
Ever since it took effect, Brexit has been criticised for weakening the British economy because it makes trade with Europe difficult and affects the ability of British citizens to travel freely in Europe. The new deal concerns such things as the flow of agriculture goods, fishing rights and the ability of British citizens to travel within Europe.
To put this new deal into context we decided to republish an article by correspondent Alexander Nicoll, first published in April 2023 about the last time the British government tried to repair the damage done by Brexit by renegotiating trade with Europe. We launched Decoder Replay to help readers better understand current world events by seeing how our correspondents decoded similar events in the past.
On the morning of David Cameron’s resignation as prime minister of Great Britain seven years ago, I wrote a story for News Decoder. Cameron had lost a referendum on Britain’s membership of the European Union.
The article was an attempt at rational analysis in a moment of massive shock. As many as 17.4 million people had voted to quit the EU. One sentence in particular strikes me now: ‘A referendum will rarely end an issue once and for all.’
So it is proving. Brexit happened, and its ideologues drove the hardest separation from the EU that they could. But now, Britain has begun to see the damage being done to its economy, and Brexit’s supposed advantages are being exposed as hollow.
Already, a slightly more emollient British government has negotiated a new deal with the EU on Irish border arrangements. Over time, there are sure to be more discussions on creating smoother relations in areas where Brexit has caused particular difficulties — for example, on industrial standards and border controls.
Even if this happens, however, the Brexit-induced effect on economic growth and trade will be long-lasting.
Can the trade barriers fall?
British businesses have to deal with costly and tiresome bureaucratic barriers to make even tiny sales to European customers, and European businesses will soon face the same in reverse, when the UK introduces border checks on goods coming from the EU.
Many companies can no longer be bothered, and have given up.
According to figures compiled by the Financial Times, Britain’s goods export performance is now the worst in the G7 group of industrialised countries. The Office for Budget Responsibility, which provides independent advice to the UK government, assesses that ‘both exports and imports will be around 15% lower in the long run than if the UK had remained in the EU.’
And John Springford of the Centre for European Reform, a London-based think tank, calculates that Brexit had reduced the size of Britain’s economy by 5.5% by the second quarter of 2022.
It needs to be remembered that rational economic points like this did not prevail in the referendum.
National sovereignty or a strong economy
Brexit supporters would still argue that the economic damage is a price worth paying for reversing what they saw as a loss of sovereignty caused by EU membership.
The Brexit vote was primarily emotional, a protest not just about supposed subservience to Brussels, but also against immigration. More broadly, it tapped into disillusionment in rural and post-industrial heartlands with the establishment ‘elite’ — a feeling exploited not just by British populists but also by Donald Trump in the U.S.
The referendum triggered in the UK a period of toxic and chaotic politics centered around the terms of Britain’s EU exit. Three more prime ministers came and went, and it is only under Rishi Sunak, the fifth Conservative prime minister in seven years, that a change in tone has emerged, and a willingness to deal with European leaders more constructively.
This change is very limited. It does not mean any softening of the Brexit rhetoric. Orwell-speak is still everywhere in government communications. When long queues of buses built up at the port of Dover recently, delayed by French passport controls, ministers said Brexit had nothing to do with it — which is obviously false.
And Sunak, touting an agreement with the EU to resolve problems with the Irish border, proclaimed that people in Northern Ireland were in an ‘unbelievably special’ position as they could access both the EU and the UK markets — something available to every UK citizen before Brexit.
What freedoms did Brexit bring?
The government boasts of its freedom to strike trade agreements around the world, but those it has reached so far in the Asia Pacific will have an invisibly tiny effect on the UK economy. Among the ‘freedoms’ of Brexit are a different colour for passports and having a stamp on pint beer glasses.
Only with a future new government — of whatever political hue — will Britain have the opportunity to become less tied to previous Brexit-related promises. It could begin to recognise realities and seek solutions to the problems that Brexit has created. This does not mean reversing Brexit — no politician can think of that in the foreseeable future — but rebuilding trade and foreign relations in mutually beneficial ways.
Britons could also re-address, without the simplistic slogans of a campaign, the question of how best to achieve UK sovereignty.
The supposed loss of sovereignty caused by EU membership was always inflated by Brexiteers. Do we think that France and Germany are not sovereign nations, because they are in the EU? It could be argued that Britain was more in control of its own destiny as a leading member of the EU than it is now.
In the longer term, Britain and European countries could begin to forge a new strategic and economic relationship. They do, after all, share the same strategic interests on major issues such as Russia, Ukraine, China, the Middle East, climate change and nuclear proliferation.
The debate about what sort of relationship Britain should have with Europe has been going on for hundreds of years, and will continue.
It should, because it is fundamental to Britain’s existence as an island nation situated off the coast of the large European continent. After the wars of the 20th century, the pendulum swung towards a very close relationship, in effect towards economic union. Now, it has swung in the opposite direction. Which way will it go next?
Questions to consider:
1. How would you define national sovereignty?
2. How can a nation set its own rules and yet continue to trade with other nations?
3. Over time, what type of Europe/UK relationship will be most conducive to prosperity and security?
