A Call to Action: Strengthening the EU-UK Economic Relationship

Strategic Insights -

As the spectre of protectionism casts its shadow over the world economy, leaders are preparing for the EU-UK summit next week. The BusinessEurope and CBI, representing over 25 million businesses across Europe, have come together to publicly outline the business priorities for a refreshed EU-UK strategic partnership. In a formal letter to UK Prime Minister Sir Keir Starmer and European Commission President Ursula von der Leyen, they have set out the concrete steps needed to improve this crucial relationship.

Key Takeaways:

  • The EU-UK Trade and Cooperation Agreement has committed to linking respective carbon pricing systems, but progress has been slow. The mutual exemption to carbon border adjustment mechanisms would prevent new trade barriers hindering electricity imports and stalling joint grid projects in the North Sea.
  • Energy co-operation between the EU and the UK could deliver both energy security and a resilient, low-carbon economy. The two sides share the North Sea and have aligned their net-zero ambitions.
  • Mobility has become an overly politicized issue, risking stagnation. However, people traveling across borders for services, which represent 48% of total bilateral trade, should be focused on making this happen through mutual recognition of professional qualifications or enhancing short-term business travel.
  • The UK leaving the EU's regulatory and customs regimes has left companies on both sides of the Channel with their own Brexit red tape to deal with. A sanitary and phytosanitary agreement would support agricultural and food products moving with less friction across borders without compromising high standards of food safety and animal health.
  • Reducing costs doesn't require re-entering the customs union. Recognising each other's testing and certification would also reduce barriers to trade in goods.
  • The EU has such agreements with the US, Canada, and several other countries, so why not the UK?

Statistics:

  • 25 million businesses
  • 48% of total bilateral trade represented by services
  • Share of the North Sea between the EU and the UK
  • Net-zero ambitions aligned between the EU and the UK
  • 40 European federations represented by BusinessEurope
  • 20% (phased out by 2030) of free allowances in the UK's emissions trading scheme

Sources:

  • BusinessEurope
  • CBI
  • EU-UK Trade and Cooperation Agreement
  • European Commission President Ursula von der Leyen