It took almost two years in power for Keir Starmer's Labour government to make a statement on the most divisive issue in post-war British politics.
With the economy stagnating, the war in Iran causing an energy crisis, and Donald Trump an increasingly unreliable ally, the British Prime Minister turned to Brussels, not Washington, in his address to the nation this month.
“Brexit has done a lot of damage to our economy,” Starmer said, echoing a view long held by economists. He promised Britain would be “more ambitious” in deepening ties with the EU, saying the benefits were now “simply too great to ignore.”
But diplomats and analysts warn that Starmer may have already missed the opportunity for a major pivot to Europe. Time is running out - both for negotiations and for him to show voters any real economic benefits from closer cooperation with the trading power across the Channel.
EU officials openly doubt Starmer’s ability to deliver, as he fights to stay on as prime minister, and Nigel Farage’s Reform UK party, which is leading in the polls, has said it will cancel any “reset” of relations with Brussels. “We have a list of ten priorities that are far more important,” says one EU diplomat.
The question in Westminster is whether the Prime Minister's approach to Europe is a serious attempt to breathe new momentum into negotiations with Brussels or just a tactical move to appease Labour MPs who are increasingly irritated by his reticence on the issue.
They are concerned that the results so far of Labour's "reset" of relations with the EU have been limited.
The package of measures that should be agreed at the EU-UK summit in July, according to the government's own estimates, will increase British GDP by only 0,3 percent over the next fifteen years.
The measures include an agreement to remove controls on food and drink exports, as well as re-linking the EU and UK carbon pricing systems. A youth mobility agreement, which would allow 18-30 year-olds to live and work in the EU or the UK for up to three years, has not yet been reached.
Industry groups have welcomed the progress, however limited, but note that it represents only a small part of the loss of around four percent of GDP attributed to Brexit, according to estimates by Britain's fiscal watchdog, the Office for Budget Responsibility.
EU diplomats say such modest results are inevitable because Labour is sticking to the "red lines" in its election manifesto that hark back to the time of former Conservative Prime Minister Boris Johnson. Starmer's government, like previous ones, rejects deepening institutional ties with the EU, such as forming a customs union or rejoining the single market.
"Where I think it went wrong is that the British demands essentially remained the same," says another EU diplomat.
"They are looking for a 'reset', but it's like old wine in new bottles: they want to be part of those segments of the single market where they feel they have a competitive advantage. And they don't want to pay."
Such a view is not limited to Brussels. The House of Commons Foreign Affairs Committee last month criticized the reset of relations, saying it lacked “direction, clarity and momentum.” While the committee welcomed the British government’s warmer tone, it criticized ministers for vaguely calling for “alignment” with Europe without offering a strategic plan.
“The tension between saying ‘Brexit costs eight percent of GDP’ and saying ‘we have a reset that won’t change much’ is untenable,” says Anand Menon, director of the UK in a Changing Europe think tank. “We are now approaching a tipping point where the status quo is no longer stable or sustainable.”
Reset or replay?
Officials from the UK and the EU admit that the first 18 months of negotiations to "reset" the relationship have weakened trust on both sides.
Labour had hoped for a quick win by restoring pre-Brexit access to Europe for touring musicians and professionals. However, that demand was quickly rejected by Brussels, which once again ruled out the possibility of Britain “picking the best bits” of access to the EU single market.
The same demands were made - and rejected - during Rishi Sunak's government. But Labour expected a different response.
“There was a startling naivety at the beginning,” says one Brussels source who advised the new government. “They thought that because they weren’t conservatives, a lot of things could just get done.”
Officials in Brussels added that member state capitals were disappointed by Labour's reluctance to accept a youth mobility deal that would include lower "domestic" tuition fees for EU students at British universities. This, they said, reduced the incentive for member states to push the European Commission to take a more ambitious approach in the negotiations.
"The EU's only demand is an agreement on youth mobility," says an EU official close to the negotiations.
The Commission was additionally careful not to offer the UK anything that could be interpreted as selective access to the single market, as such concessions could influence the debate in Switzerland, which is due to hold a referendum next year on a package to update its relations with the EU.
Since Labour came to power, European Commission President Ursula von der Leyen has spoken of a “new chapter” in relations between the UK and the EU.
But what is happening under Starmer looks less like a reset of relations and more like a replay of old disputes from previous rounds of negotiations.
"The political will exists, but the bureaucratic will does not," the EU official adds.
For example, last November, a disagreement over money led to the collapse of negotiations on Britain's participation in a new €150 billion EU defense fund - despite agreement at the leadership level on the strategic need for a common European arming.
Although Germany, the Netherlands and Belgium tried to mediate with the European Commission to reduce the cost of British accession by two billion euros, no agreement was reached.
The price, which London dismissed as excessive, was the result of French insistence on protecting the EU's defense industry.
“At the end of the day, we are in the same club, so we have to support a member rather than someone outside,” says one senior EU diplomat, pointing to the limited effect of London’s warm words in relations with Brussels after Brexit.
The British government is counting on changing the narrative with a summit in July, where it hopes to reach an agreement that would pave the way for the lifting of some border controls for plant and animal products, as well as prevent British industry from paying a new EU carbon tax, along with some kind of agreement on youth mobility.
In Britain, such deals are far from unquestionable. A border control deal would require the UK to automatically follow EU rules and regulations - what is known in the jargon as "dynamic alignment" - leading the Conservatives and Reform UK to accuse Labour of "selling out" the country to Brussels.
The government responds by putting economics before ideology.
Return to the “all or nothing” principle
Surveys show that deep divisions over Brexit still exist in the UK.
But as Labour stumbles, faced with a series of scandals and growing questions about Starmer's political fate, there is a growing consensus on the left that a more ambitious approach to Europe could bring in votes.
In contrast, both Reform UK and the Conservatives have pledged to leave the European Convention on Human Rights in order to gain greater freedom to deport irregular migrants. Analysts warn that this could put London's existing trade deal with Brussels at risk.
“We are back to a situation where Brexit is being debated again on an all-or-nothing basis,” says Menon. “The debate within the Labour parliamentary group is changing rapidly.”
A YouGov survey, published this month by the pro-European organisation Best for Britain, shows that a clear message about rejoining the EU would boost support for parties on the left - Labour, the Greens and the Liberal Democrats - significantly more than more moderate views.
"Remaining in the EU is the most viable political option," says Tom Brufato, director of policy and research at Best for Britain. "Not only would it deliver the greatest economic growth, it would also mobilise the support of progressive voters across the country."
"If a referendum on Brexit were held today, half of citizens say they would vote to remain in the EU, compared to just over a quarter who would vote to leave," says Luke Trail, executive director of More in Common, noting that almost half of the public still believes that Brexit could have been successful, but that politicians implemented it poorly.
Whether any future left-wing government will be able to initiate a more meaningful dialogue with Brussels will depend on its willingness to face fundamental compromises, says former British ambassador to the EU, Sir Ivan Rogers.
He believes it is naive to expect the EU to soften its negotiating position due to the rise of Donald Trump and threats from Russia and China.
“The key question is: where do you want to be in 10 or 15 years, in the world we seem to be heading towards? Is the UK really ready to re-examine its red lines?” asks Rogers. He questions the sustainability of the UK’s strategy, which currently seems to be trying to align with Europe in industrial products while moving closer to the US in technologies such as artificial intelligence.
Charles Grant, director of the Centre for European Reform, a think tank, is skeptical about the idea of re-entering the EU, saying Brussels would not accept such a move without a clear political consensus in the UK. For now, that seems far-fetched.
However, he believes that a British government willing to relax existing red lines could persuade Brussels to agree to some kind of "single market for goods", in which the UK would align in key industrial sectors but retain flexibility in the area of services.
“The UK is saying ‘no’ now, but it is not saying ‘no forever’,” he says. “If it is prepared to ‘pay for participation’, accept dynamic alignment and show flexibility on the key issue of freedom of movement, the EU would find it difficult to reject such ‘picking the best parts’.”
Many EU diplomats do not rule out such a deal. But they argue that it will require a much more decisive approach from the British government.
“Britain needs to have a conversation with itself,” says one. “What is the strategic priority? Britain in the late 19th century would have had no problem understanding that you have to invest money to be a global power. Why doesn’t that apply to Britain today?”
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