LONDON — Keir Starmer is promising British voters he’ll fix the Brexit-shaped hole in the U.K. economy, but Brussels appears to have quite enough on its plate.

Days after Britain’s grim growth prospects were laid bare in the U.K. budget, the country’s PM gave two speeches promising closer ties with the European Union and elevated his EU point person, Nick Thomas-Symonds, to the Cabinet.

“We have to keep moving towards a closer relationship with the EU, and we have to be grown-up about that, to accept that that will require trade-offs,” Starmer said on Monday.  

But European leaders are already grappling with packed in-trays as they look for an end to Russia’s war in Ukraine and confront their own domestic economic challenges — and skepticism remains as to how much room for maneuver the British PM actually has. 

Starmer’s political red lines — no customs union, no single market, and no return to freedom of movement — remain in place, and ministers continue to stress that a return to full EU membership remains off the table.

Even Starmer’s existing EU “reset” agenda — which aims to walk back some of the harder edges of Boris Johnson’s Brexit settlement — is not all going to plan.

A push to join the EU’s SAFE loans-for-arms scheme crashed last week after the two sides failed to agree on how much money the U.K. would pay.

“The same ‘how much should the U.K. contribute?’ question has been slowing down the actual implementation of basically all the reset topics,” said one EU diplomat who was not authorized to speak on the record.

Despite plenty of talk in London about closer ties, the forum for putting fresh topics on the agenda would be the EU-U.K. summit that is due next year. But a date has yet to be set for that gathering.

“Nobody is talking about the next summit here yet. I’m not saying it isn’t going to happen, it’s just a question of bandwidth,” another EU diplomat said.

“For us the focus now is to work through our existing commitments and finalize those deals, start implementing them and then showing that the deals are bringing value. That takes time,” a third diplomat said.

Limited scope 

The problem for Starmer is that his existing plan to rebuild EU ties is unlikely to move the dial on U.K. economic growth.

Economists at the Centre for European Reform reckon that the government’s reset package — if delivered in full — is worth somewhere between 0.3 percent and 0.7 per cent of U.K. GDP over a decade.  

Meanwhile, academics at the Bank of England and Stanford University calculate that the economic hit from Brexit could be as high as 8 percent of GDP over a similar period.

“It is striking how frequently the chancellor and prime minister will now lament the costs of Brexit, without making any suggestions on how to change the status quo,” said Joël Reland, research fellow at the U.K. In A Changing Europe think tank. 

“This could be read as a slow creep towards a breach of their red lines, but I suspect it is mostly about domestic political management. They are in a sticky economic situation and Brexit is a convenient thing to blame. I don’t think they’d be brave enough to risk a manifesto breach on Brexit, but I’d be surprised if ‘no single market or customs union’ is in the 2029 manifesto,” Reland said. 

One British government official stressed that Labour’s red lines remain in place — but added: “We don’t think we’re at those red lines yet.” 

Breaking the taboo 

Labour’s previous reluctance to talk about Brexit was born of a fear of upsetting Leave-leaning swing voters whom the party wanted to win over in the last election. 

But that started to change over the summer. 

Thomas-Symonds, the minister in charge of delivering the reset, went on the attack in a speech hosted by the Spectator, a right-wing magazine. Parties pledging to reverse Starmer’s reset were offering “more red tape, mountains of paperwork, and a bureaucratic burden,” he argued.

To the surprise of Downing Street aides, the attacks landed well and drew a line between the government’s agenda and that of Reform UK boss Nigel Farage — the longstanding Brexiteer dominating in the polls — and Conservative Leader Kemi Badenoch. 

It emboldened Starmer and his lieutenants. Rachel Reeves, the U.K.’s chief finance minister, used her speech at the Labour Party conference in Liverpool to talk up the benefits of improved cross-border mobility for the economy.  

Ahead of last week’s difficult budget stuffed with tax rises, she waded in further, damning the effects of a “chaotic Brexit.”

While the new rhetoric has yet to be backed up by a shift in policy, there are signs that some of Starmer’s close allies are starting to think bigger. 

Rejoining the EU customs union was reportedly raised as an option by Starmer’s economic advisor ahead of the budget — but was rejected. “There are definitely people who have been pushing at this for a long time,” one person with knowledge of conversations in government said. 

“I don’t think that will be that surprising to people, because if your primary goal allegedly is growth then that’s one of the easiest levers you can pull. Most economists would agree — it’s the politics that’s stopping it.” 

Pressed on the prospect of Britain’s applying to rejoin the customs union on Wednesday, Health Secretary Wes Streeting did not explicitly rule out the idea but stressed the government’s policy was about “new partnerships and new relationships, not relitigating the past.”

If Starmer opts for a risky manifesto-busting push to rejoin the customs union, diplomats say even that is unlikely to be a quick fix for the British PM. 

“It would take time. Just consider how slow has been so far the progress on SPS, ETS and Erasmus,” the first diplomat quoted above said. “As of now, the U.K. needs the EU to spur its growth, not the other way around.”