Liberal Democrat leader and MP Ed Davey argued that the UK should negotiate a new customs union agreement with the EU, according to the BBC.
Davey states that a return to a customs union is necessary to galvanise the UK economy and its ability to cope with the impact of Donald Trump‘s return to the White House. Previously, Trump threatened to impose import duties, which raised concerns in many countries reliant on exports to the US.
Countries in the customs union agree not to levy tariffs or conduct inspections on each other’s goods. However, under EU rules, they also cannot conclude their own trade agreements.
Prime Minister Keir Starmer called for a reset in relations with the EU but ruled out the possibility of rejoining the customs union or the EU single market. In addition, Business Secretary Jonathan Reynolds said the Liberal Democrats “only ever think about Europe”
Of course, it is a major market, but this is a government that wants to improve that relationship with the EU but also wants to do work with the US, with India, with the Gulf. I think the UK could be positioned as the best economy between those major trading blocs and I think what the Lib Dems are saying today is not taking into account that wider global position.
However, Davey’s call for rejoining the EU customs union was not about ideology but aimed at putting the UK in the best position to engage with the new Trump administration and the EU, the party clarified.
The UK left the European Union in 2021 when Brexit took effect. The move deprived London of the ability to trade freely with EU member states. Meanwhile, joining the EU customs union will allow it to bypass trade barriers.
Last week, the value of the pound fell sharply, with the UK’s cost of government borrowing rising to a decade high. However, ministers were given some respite on Wednesday when government bond yields (gilts) fell after official data had showed an unexpected drop in inflation.
