The UK’s search for a post-Brexit partnership with the EU is caught between economic necessity and political constraint, limiting how far a “reset” can deliver substantive integration
The geopolitical landscape of 2026 bears little resemblance to the world in which the United Kingdom (UK) voted to leave the European Union (EU) a decade ago. With threats to annex Greenland and withdraw from NATO, United States (US) President Donald Trump’s return to the White House has strained transatlantic relations, signalling fundamental shifts in US foreign policy and consequences for the European security architecture.
The ongoing US conflict with Iran has created dilemmas for US allies globally, including the UK. Following the UK’s refusal to allow American offensive strikes against Iran from British military bases, UK–US relations, once touted as the UK’s most ‘special Relationship’, have soured considerably and may be “beyond repair”. Beyond the diplomatic fallout, the Organisation for Economic Co-operation and Development (OECD) has warned that the UK faces the largest hit to economic growth of any major economy, due to Iran's blockade of the Strait of Hormuz, which has sent oil and gas prices surging and triggered a fresh spike in household energy bills.
Against this backdrop, UK Prime Minister Keir Starmer has pledged “a stronger relationship with Europe” on “defence and security, energy, emissions and the economy”. Yet Brexit created a complex web of legal, economic and political constraints, rendering a closer post-Brexit EU–UK partnership complex.
The Labour government came to power in July 2024, promising a “reset” in UK–EU relations. The May 2025 summit at Lancaster House was hailed as a historic moment, producing a new Strategic Partnership and Common Understanding across several areas of potential cooperation, from fisheries and agriculture to energy, defence, education and youth mobility. An EU–UK Security and Defence Partnership (SDP) was signed, ostensibly paving the way for UK defence companies to participate in the European Union’s (EU) €150 billion Security Action for Europe (SAFE) defence procurement fund.
The UK’s potential participation in SAFE collapsed in November 2025 after the EU demanded a €2 billion financial contribution, equivalent to roughly 10 per cent of Britain’s annual defence budget.
Yet the momentum has since stalled. Negotiations on a Sanitary and Phytosanitary (SPS) agreement to ease agri-food trade—a key goal from the May 2025 summit—have moved slowly, while talks on a youth mobility scheme to allow young Britons and EU citizens to live and work in each other’s countries are in deadlock over university tuition fees. The most substantial achievement so far is the UK’s re-entry into the Erasmus+ programme, confirmed for 2027.
Notably, the UK’s potential participation in SAFE collapsed in November 2025 after the EU demanded a €2 billion financial contribution, equivalent to roughly 10 per cent of Britain’s annual defence budget. This was further complicated by the insistence of member states such as France that UK participation in SAFE be linked to a separate €90 billion Ukraine loan facility. The impasse left British defence firms unable to bid for the first round of SAFE contracts. This underlines that, despite the UK’s constructive role in supporting Ukraine and European security, including in areas of clear mutual interest such as defence, cooperation remains complex.
Hovering over these negotiations is the domestic political threat posed by Nigel Farage’s Reform UK party, which continues to lead in polls and regards closer alignment with Brussels as an affront to the UK’s national sovereignty.
Published in March 2026, a report from the UK Parliament’s Foreign Affairs Committee concluded that the EU–UK reset “lacks direction, definition and drive”. It urged the government to publish a white paper outlining its vision for the relationship ahead of the next summit, scheduled for later this year.
There are clear tensions at the heart of the EU–UK reset, starting with Labour’s red lines, which include no return to the single market, the customs union or freedom of movement. Meanwhile, PM Starmer is seeking further sector-specific alignment in areas such as chemicals, medical devices and professional qualifications.
Yet even rejoining the EU single market for electricity and animal and plant products, which has been under negotiation since the 2025 summit, faces its share of obstacles. To regain access to the EU’s internal energy market, the UK is expected to contribute funding for EU cohesion, similar to Norway, which contributes €391 million annually towards EU cohesion in exchange for access to the EU energy market. Brussels is not keen to allow the UK to ‘cherry-pick’ its way into the single market without the obligations that come with EU membership, nor to risk setting a negative precedent. Flexibility on SPS standards and electricity interconnectedness has seemingly been driven by the EU’s own interests, such as the Northern Ireland Protocol and energy security. On the other hand, concerns persist that some European priorities, such as the Made in Europe industrial strategy, are at odds with British interests, given their potential to constrain British products within European supply chains.
Brussels is not keen to allow the UK to ‘cherry-pick’ its way into the single market without the obligations that come with EU membership, nor to risk setting a negative precedent.
Increasingly, a Swiss-style overarching deal of deeper integration, which Brussels confirms is on the table, is gaining traction. On 2 March, the Switzerland–EU package was finalised as a set of agreements to deepen ties, granting Switzerland access to the single market in sectors such as electricity, transport, industrial goods and food, as well as access to EU programmes such as Erasmus+ and Horizon. In return, Switzerland committed to financial contributions to the EU budget and the free movement of people. Analysts estimate that limited alignment deals would add only 0.3 percent to UK GDP by 2040, while a more comprehensive arrangement, such as the Swiss model, would deliver substantially greater economic gains.
Reaping the benefits of the EU single market will come with obligations and trade-offs. Yet the politics are treacherous. Reform UK’s rise has created a political dynamic whereby meaningful concessions to Brussels are framed as surrender. On the other hand, the EU is reluctant to offer the UK too generous a settlement, partly out of concern that a Reform government might eventually dismantle it, and partly because a Britain suffering from Brexit is a useful cautionary tale for other European countries facing their own populist pressures.
As another EU–UK summit approaches, both sides face a choice about whether to remain mired in incrementalism or attempt something more sweeping and transformational. While the immediate pressure is to ratify existing commitments from the 2025 summit, Starmer has indicated his desire for more ambitious and “iterative” cooperation aimed at deeper sectoral alignment with the single market. Meanwhile, UK Trade Minister Chris Bryant has pushed for an overarching framework rather than a cumbersome patchwork of bilateral agreements, arguing that the current approach is slow and fragmented.
For the British economy, deeper integration with the EU is more consequential for growth generation than, arguably, any of the UK’s other trade agreements, which cannot compensate for the loss of the single market.
A YouGov survey conducted in mid-2025 found that, in a clear shift of public opinion, 8.1 million more Britons than in 2016 now favour rejoining the EU. Amid profound transatlantic turbulence, there is a clear recognition that the EU and the UK are important partners in an increasingly dangerous world that has forced a fundamental rethink of strategic dependencies on both sides of the Channel. If the situation in Ukraine deteriorates, pressure for EU–UK security cooperation and support for Ukraine will intensify, with the potential to resume SAFE talks on more favourable terms. For the British economy, deeper integration with the EU is more consequential for growth generation than, arguably, any of the UK’s other trade agreements, which cannot compensate for the loss of the single market.
Yet whether No. 10 and Brussels can eventually develop a partnership that rises above the politics and wounds of Brexit remains a catch-22. While Farage’s popularity limits how far Labour can go without electoral cost, economic stagnation makes the case for deeper EU ties more compelling.
Shairee Malhotra is Deputy Director of the Strategic Studies Programme at the Observer Research Foundation.
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Shairee Malhotra is Deputy Director - Strategic Studies Programme at the Observer Research Foundation. Her areas of work include Indian foreign policy with a focus on ...
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