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There is still lots to be done to repair the damage caused by Brexit. But that shouldn’t detract from a package of measures that goes significantly further than many – both in Brussels and the UK – expected even a few short weeks ago.
Despite how it has been reported in today’s papers, the list of achievements from this deal is substantial, and goes further than the very limited ambition set out in Labour’s 2024 manifesto.
The Government can sell the deal as a win for Britain in three big ways.
First – it keeps us safer. The security and defence pact will not only formalise collaboration in military training, planning and security, it allows Britain access to the EU’s €150bn Security Action for Europe (SAFE) defence procurement fund.
Being part of the fund means that Rachel Reeves can borrow to invest in defence without imperilling her fiscal rules. Our military will be upgraded faster, coordination with European partners will be easier.
It also boosts British industry – EU states are obligated to buy from participating countries, now including the UK. Given our defence industry is one of the biggest in Europe that should bring business to Britain.
On policing, the UK regains access to the Schengen Information System (SIS), a database which gives member states real-time alerts on criminal suspects, and the EU’s fingerprinting system, Eurodac. Increased UK engagement in Europol will be fast tracked.
Taken together the agreements on defence and policing make the UK safer not just now but for years to come, from crime and from Russia. The Government should shout this loud and clear.
The second big win is on the cost of living. New agreements on energy and food will bring down bills – a key ask of voters struggling with the ongoing cost of living crisis.
The agreement to reduce checks on food and agricultural products traded across the Channel will speed deliveries, cut costs for producers and exporters, and increase UK exports (which had fallen by a fifth since Brexit). Given the amount of fresh food we import from Europe the deal also strengthens food security – no bad thing in an era of increasing climate instability.
The final big win is on energy. The UK will be reintegrated into the EU’s internal energy market. This had been a key ask of British energy and climate sectors, given it will cut the cost of energy trading and production, and will enable a much swifter – and cheaper – rollout of renewable energy infrastructure in the North Sea.
Eased trade will cut energy bills for consumers and business. It also makes UK energy more secure and makes blackouts less likely.
Third, the reset offers something for young people. Most under 30s were too young to vote in the referendum, yet they are the most restricted set of young people in Europe – cut off from the freedom to travel, study, apprentice, work, fall in love anywhere in Europe taken for granted by their peers.
Promise of a (limited) youth mobility deal and renewed membership of Erasmus+ is – as much as anything else – about generational fairness.
We should celebrate the wins. The new deal resolves some of the major barriers created by Brexit and – particularly for defence, energy and agriculture – is of real value. Businesses will grow, exports increase, Europe’s defence capabilities will grow a little faster.
The caveat, however, is a big one. The Brexit settlement in effect put trade sanctions on our own economy – making it more costly, complicated and time consuming to import or export. The result is a 15% hit to both goods and services trade, a reality borne out by subsequent research.
That has resulted in a permanent 4% loss of GDP, according to the Office for Budget Responsibility (OBR). Others think the damage may be worse; the Centre for European Reform put the cost at 5%.
The reset deal does chip away at some of that lost growth potential – but it is a small chip. The Government estimate the deal will raise GDP by 0.3% by 2040 – a tiny fraction of that ongoing 4% cost.
And much as we must celebrate the wins it is all too easy to point to glaring gaps left unfilled. There was nothing for the services industries which make up 80% of our economy and over half of our exports. Manufacturing, creative artists, businesses demanding more mobility to enable partnership working, secondments and training all got nothing.
The slow puncture of Brexit is still leaking air from the British economy, just a little more slowly, and with a few – highly important – holes plugged.
The second caveat is that even announced measures are mostly plans and aspirations. We must wait for the detail to know their true value. Even the defence deal – while welcome – falls far short of what is needed to get European defence capabilities to a point where we would credibly be able to defend against Russian aggression without US support. Rachel Reeves will in the end need to find more money for the military.
The reset also exposed a brutal reality: the EU will always be the bigger partner in this relationship. The Brexit settlement left few asks for the EU – fishing rights, youth mobility and defence collaboration are the big three, and are all in place or in negotiation.
In contrast, the UK has much to gain from a closer relationship. The EU economy will improve if trade barriers are cut, but ours will gain far more.
Both sides have committed to annual summits. We can now look forward to annual, incremental improvements. That is no bad thing, though – perhaps against the wishes of both Leavers and Remainers – it presages a world in which the UK is perpetually negotiating deals with the EU, like Switzerland bound to a trade and security partner we can never outgrow and never escape.
There is only so far third-country status can stretch. This deal pushes the boundaries in welcome, important ways. But it could not change the basic structure of Brexit.