How can Brexit Britain navigate Trump’s World?

I apologise for the fact that this is going to be a very long post. But events since the previous one have served not just to illustrate the analysis there of a new global divide, but to show this divide to be deepening very rapidly. As numerous detailed commentaries have explained, the Munich security conference and its aftermath have “laid bare the collapse of the transatlantic alliance”, showing that “the American security shield has gone forever” with the result that “it has been without question the darkest week for Europe since the 1940s”. Phillips P. O’Brien, Professor of Strategic Studies at St Andrew’s University, wrote last weekend that “this is arguably the most important week in European history since 1991 or even 1945”. Unlike those dates, what is happening in 2025 carries little in the way of hope, and, with Trump’s announcements and actions becoming more unhinged by the day, any hope there may be is fading very, very fast.

The analysts I’ve just quoted are not excitable catastrophists, but seasoned, respected experts in politics and international relations. I would like to think I share at least some of those qualities, to at least some degree, and, personally, having for nine years been dismayed by what Brexit has done to Britain, I now actually feel frightened by what may happen here. An obvious response to that would be that there are many places, most especially Ukraine, which have far more to fear. That is most certainly true (and it is also true of the US itself where state-induced political intimidation and fear are flourishing, to the horror of decent Americans). Equally, it may be objected that what is happening has little to do with Brexit. However, that is not true.

What’s it got to do with Brexit?

As all those analysts, and many others, make plain, these ongoing developments are not just about ripping up security alliances and global norms, and not just about the empowerment of nationalist ‘strong men’ to carve up the world according to their whims, crucially important as those things are. Rather, as well as what they mean for relations between states, the pronouncements coming from Washington, most recently in Vice-President J.D. Vance’s Munich speech, are proselytizing for far-right and ‘alt-right’ populism within states. Hence Vance’s praise for Brexit and his comments about the German and Romanian elections, which of course come on the heels of Elon Musk’s repeated interventions in British (£) and German politics.

The two aspects are linked. The Trump regime’s loathing for ‘Europe’ is multi-dimensional, seeing it as a parasite in security terms and the ideological homeland of elitism, woke liberalism, and globalism. The EU, specifically, is despised, and resented, as an economic and regulatory power and, perhaps more diffusely, as an exercise in rules-based international cooperation and pooled sovereignty. Indeed, hatred of Europe and of the EU is one of many strands binding together Trump, Putin and the Brexiters.

Since the UK is geographically, historically, economically and, in many respects, ideologically a European country, this necessarily poses profound questions for this country. But Brexit greatly complicates those questions, not simply because it means the UK is detached from the EU, but because Trumpist approval of that makes it quite likely that the US will attempt to exacerbate that detachment at precisely the moment when its folly is most obvious. That might take the form of offering the UK exemptions from new tariffs (about which much is still unclear) or other, including non-material, favours. Far from the present moment being one where, as Keir Starmer seems to think, the UK can once again be a ‘transatlantic bridge’, the reality is that it has the potential to rupture the country, ripping it further from its ideological and geographical allies in Europe but with no prospect of being anything other than the plaything of Trump’s increasingly vicious and unpredictable whims.

However, it is not just a matter of Trump seeking to meddle in Britain’s international relations and internal politics. Nor is it just that, in doing so, he will be joining Putin’s own longstanding attempts to do the same. If it were only that it would be obnoxious and dangerous. What makes it, also, frightening, is that both Trump and Putin have so many willing and powerful accomplices within the British polity*. That means, most obviously, Nigel Farage, the now dominant alt-right and NatCon elements of the Tory Party, the weird ex-RCP coterie and the Tufton Street mafia – both groupings which enjoy disproportionate media influence – and, it is increasingly clear, the ‘Blue Labour’ movement. And they would be neither so numerous nor so powerful had it not been for Brexit.

It was an apposite coincidence that, on the very same day that Starmer went to Paris to meet other European leaders this week to discuss Trump’s Ukraine démarche, the ‘Alliance for Responsible Citizenship’ (ARC) met for a major conference in London. This was a gathering of the assorted world-wide clans of populism and neo-fascism, with British representatives including Kemi Badenoch, Farage, and the ARC Advisory Board member Maurice Glasman of Blue Labour. For want of a better name, the UK contingent can be called ‘Brexitists’ since their bedrock belief is support for Brexit, denial of its failure, and commitment to some or all of its flawed logics.

There are many things at stake in all these unfolding developments, but for the UK, specifically, their immediate manifestation is the question of this country’s relationships with the EU and the US. The Brexitists are quite clear that this is the latest front in their battle, exemplified by Daniel Hannan (who else?) declaring (£) that “we can’t let Labour drag us back into the shrinking orbit of the anti-Trump Eurosphere”. He was right to identify Vance’s Munich speech as making it undeniable that there is a very fundamental choice to be made but, as usual, entirely wrong about what the response should be.

A new proposal for UK-EU relations

Nevertheless, a response will have to be found, and one proposal was made in a report commissioned by Best for Britain (BfB), which was published at the beginning of last week, and which received a lot of media attention (£). It is a timely, important, and serious piece of work, and warrants serious attention, as a constructive proposal to move beyond the current Brexit impasse and to engage with some of the emerging realities of Trump’s new world order.

The report models the economic effects of ‘strong regulatory alignment’ between the UK and EU as regards goods, and also as regards both goods and services, and then models each of these in the scenario of Trump imposing trade tariffs on all goods imported by the US (at an assumed rate of 20% for those from the UK and the EU). Importantly, pursuing strong regulatory alignment in the meaning of the report would not require the Labour government breaching its ‘red lines’ of not rejoining the EU, the single market, or the customs union, and of not agreeing freedom of movement of people. In that sense, it is intended to be a politically viable proposal from a UK perspective.

The ‘headline’ results are quite striking. With strong regulatory alignment in both goods and services, and if there were no Trump-tariffs, UK GDP could be up to 2.2% higher per annum in the long-run than it would otherwise have been, and, even in the event of Trump-tariffs, up to 1.5% higher. This would make a substantial dent in the standard (OBR) estimate of Brexit making UK GDP 4% lower than it otherwise would have been in the long run, and considerably more effective than the more basic ‘reset’, consisting simply of those things the UK and EU have specified they will seek, which John Springford of CER recently estimated to be worth 0.3% to 0.7% of UK GDP. Moreover, both for many individual EU member states and for the EU as a whole the result would be positive or, in the event of Trump-tariffs, would make their impact less negative than it would otherwise have been. So agreeing deep regulatory alignment is presented as a ‘win-win’ for the UK and the EU.

The core concept of the report is that of ‘strong regulatory alignment’:

“Regulatory alignment in goods in this scenario is based on the principle of mutual recognition by the UK and the EU of each other’s regulations. We envision an expansive approach to mutual recognition, in which the UK and the EU take active steps to minimise regulatory divergence and commit to recognising the equivalence of each other’s regulations.” (p.12, followed by a similar definition for services).

This will be very familiar to readers of this blog, and to Brexit-watchers generally, and perhaps will be ringing some alarm bells, because ‘mutual recognition’ has for years been seen by many Brexiters as the silver bullet to reduce the economic costs of Brexit. BfB, of course, are very far from being Brexiters, but whoever proposes it, it has the same problems. I’ve written about these numerous times before, most recently on the last occasion the idea surfaced.

What is ‘Mutual Recognition’?

This is a very complex issue to unpack in full. In broad terms, mutual recognition (MR) means that goods and services which meet the regulations within one market are deemed to meet those which obtain in another, and vice versa. Within that, one crucial distinction is between MR based on ‘equivalence’ and that based on ‘dynamic alignment’ (and/or other forms, such as MR of conformity assessment testing, which I won’t discuss here, though could also become relevant).

Under ‘equivalence’ agreements, the EU and the UK would recognize that, whilst different in some details, their regulations were broadly compatible, and each party would take responsibility of legally enforcing their own regulations. Under ‘dynamic alignment’ (DA) agreements, one party – and in practice it would almost always be the UK – agrees to completely track EU regulations, and as a result the UK’s regulations would be ‘recognized’ by the EU. This is really only ‘mutual recognition’ by courtesy, as the alignment is all one way, even though the ‘recognition’ goes in both directions, and both the source and the enforcement of regulations would ultimately lie with EU law and EU courts.

So, much depends on what form of MR is envisaged, and in that respect the use of the term ‘equivalence’ in the BfB report is either an unfortunate mistake or a problem. We already know that the EU is very reluctant to enter into equivalence agreements with the UK. They aren’t impossible (there are some in relation to aspects of financial services and, in effect, in the EU recognition of the ‘adequacy’ of the UK data protection regime), but as regards Sanitary and Phytosanitary (SPS) regulations an ‘equivalence’ agreement (sometimes called a ‘New Zealand-style’ agreement) has already been proposed by the UK and rejected by the EU. By contrast, a ‘dynamic alignment’ (or ‘Swiss-style’) SPS agreement has been offered by the EU but rejected by the UK.

It isn’t just on SPS regulations that we’ve already been round this loop. MR based on equivalence in a number of areas featured heavily in the UK government’s February 2020 document on its approach to the negotiations undertaken by David Frost, under Boris Johnson, which ultimately led to the TCA. Almost all those proposals foundered, as they were bound to. In large part that was because what makes equivalence appealing to Brexiters (most especially lack of ECJ jurisdiction) is what makes it unacceptable to the EU. As Michel Barnier put it in 2018: “In the absence of a common discipline, in the absence of EU law that can override national law, in the absence of common supervision and a common court, there can be no mutual recognition of standards.”

What about expansive use of Dynamic Alignment?

However, although regulatory equivalence as the basis of expansive MR is a non-starter, what about ‘dynamic alignment’ (DA)? Since the EU does appear to be willing to use that form of MR for SPS regulation, could it perhaps be used expansively? It’s true that this would overcome the problem that lack of ECJ involvement poses for the EU. It also seems to be true that the presence of ECJ involvement is no longer a red line for the UK under the Labour government. Nevertheless, other issues would still remain.

In particular, even under DA each side has to monitor (and/or trust the other side to monitor) that both sets of regulations are aligned. This is a much more complex matter when DA is being used over a wide range of sectors, as envisaged by the report, partly because there is so much more to monitor and partly because there will often be difficulties in knowing where MR applies and where it doesn’t. This arises because crucially, even under the most ‘expansive’ use of DA, but unlike within the single market, the UK would retain the right to diverge in areas not covered by DA.

To take one increasingly important example, assume, as seems extremely likely at the moment, that the UK retains (and perhaps even exercises) the right to diverge in AI regulation. Given the extent to which AI looks set to be imbricated, in some way or another, within so many different business sectors across both goods and services, imagine how difficult it is going to be to determine whether, in relation to any particular product or sector, DA does, or does not, apply. I don’t say that it would be impossible, and certainly the AI example, specifically, is largely uncharted water, but it would involve huge technical complexity, at least if attempted not for one or two areas but at scale.

Indeed the problem isn’t DA agreements as such, it is scaling them up so as to meet the ‘expansive’ MR regime required to yield the headline economic benefits of the BfB report. Ultimately, that isn’t just about technical complexity, it is because the expansive use of DA is effectively an attempt to reproduce selective aspects of the single market but outside of the ‘ecosystem’ of single market agencies and institutions. As such, the more it is used, the more of a threat it would represent to the integrity of the EU single market meaning, at its most generic, the way in which membership confers distinctive advantages over non-membership. That notion, which some Brexiters tend to treat as meaningless or, alternatively, as some kind of EU ‘theological’ dogma, is actually of fundamental importance (hence, amongst other things, many of the issues that have arisen for Northern Ireland).

So (why) would the EU agree to it?

To that, there are several answers. One is that, unlike proposals for equivalence agreements, MR hasn’t been proposed before on a DA basis. Actually, that isn’t quite true, as arguably it was proposed, at least for goods trade, under Theresa May’s 2018 Chequers Proposal for a ‘common rule book’, but as that caused her government to implode it never really got to the point of being negotiated in detail with the EU in the form of a TCA, and would undoubtedly have encountered much resistance from the EU (I’m skipping over a lot of detail on this point). Still, something like it might eventually have been agreed and, anyway, we are now in different times, not least because EU concerns that Brexit might lead to a bigger exodus of members have now largely disappeared. Even so, the EU continues to face the possibility that an expansive DA deal with the UK might set a precedent, with member states seeking to ‘mix and match’ areas for alignment/ divergence.

The more important answer is that we are in different times because the economic situation of the EU, and especially of its largest members, Germany and France, is now much worse than it was in 2018, and the most important answer of all is Donald Trump. Those two things are related, because the state of many EU economies makes the threat of Trump-tariffs all the more dangerous. It is this, clearly, which the BfB report highlights, showing how a strong alignment scenario between the UK and the EU could offset some of the damage of Trump-tariffs, and it is on this basis that it is presented as a win-win proposal.

That may well be true, but, although the context is different, it is still a rather familiar idea, and another one which we used to hear from Brexiters. Their claim from the outset was always that there would be a very expansive post-Brexit deal, even to the extent of offering “the exact same benefits” as membership, because that would be in the interests of both sides, and they repeatedly complained that the EU was allowing ‘politics’ to get in the way of economic interests. In particular, they repeatedly argued that ‘German car makers’ (as an emblem for other EU industries) would ensure such a deal and, when that proved false, again framed that as an EU failure to represent the economic interests of its members and instead to prioritise Brussels ‘dogma’.

But (apart from their other flaws) these claims were mistaken by not recognizing that, whatever the immediate economic interests of some businesses, or even some countries, the long-term economic interests of all EU members and businesses were absolutely dependent upon retaining the integrity of the single market, and the expansive use of MR, even in its DA form, necessarily risks that, extensively recreating selective aspects of the single market for non-members. Now perhaps it is true that the possible impact of Trump’s tariffs will change the balance of calculations of the risks and benefits of this. But personally, I feel suspicious of yet again going down the track of making proposals based upon assumptions about what the EU will, or ‘ought to’ recognize as being in its own interests.

Having said all this, it could still be argued that Trump’s return, in a dramatically more aggressive and virulent posture than before, has changed everything, not so much, or not simply, because of the economic threat of tariffs but because of having started to rip up the international security order, and all the issues with which I began this post. Is this true? To be honest, I simply don’t know. In some ways, the opposite could be argued. To the extent that the single market is the economic basis of such geo-political clout as the EU has, that might suggest there is all the more reason to maintain its integrity.

Nevertheless, I do think that, despite what some ‘die-hard remainers' think, the understandable unwillingness of the EU to make economic concessions to the UK in return for security and defence cooperation, a proposition which was first made by May when Article 50 was triggered in 2017, and looked like blackmail then, may have changed. Almost everyone now thinks that Europe, as a continent, needs to get itself together as a serious defence player, and that is not going to be easy. It will entail the EU and its members doing many things they find distasteful, and this could be one of them. It might also be that previous, and again understandable, reluctance to entertain a complex and tangled MR-based relationship between the EU and the UK might be reduced. In a world which has suddenly become extremely disordered that might now seem a relative trivial piece of messiness. It would certainly be lazy simply to dismiss that possibility out of hand as ‘cakeism’, or to dismiss the very real differences created by Trump’s return. This isn’t 2016-2020.

The real choice

For all these reasons, there may well be a good argument for the UK to explore the BfB report’s ‘strong alignment’ model and propose it to the EU, at least informally, and see what the reaction is. But I keep coming back to the problem that it is very difficult to see how the EU can embark on a major deepening of relations without a high degree of confidence that the UK is going to be a reliable partner, and there is no real prospect of that whilst Brexitism remains so influential. After all, it’s perfectly realistic to think we may be only three years away from having a nationalist and populist government with a doctrinal hatred of the EU.

For Brussels, that would mean dealing with a UK government which has scant regard for acting in a trustworthy manner about any MR agreements which may be in force and would very likely revoke them anyway. The answer to that concern cannot, realistically, be that, if it happens, the EU can just revert back to the current TCA terms after having put in all the effort of creating an expansive MR regime involving a complex patchwork of agreements.

Some deny any such risk exists, arguing that UK business lobbies would prevent any future government from revoking agreements made by Labour. But this is really just the ‘German car makers’ argument in reverse, and the history of Brexit hardly suggests that business is very effective in controlling a government – in this scenario perhaps a Reform-Tory coalition – animated by ideological loathing of the EU and populist conceptions of ‘sovereignty’. So the risk is real, and it would be a very considerable one for the EU to take.

Moreover, although this wouldn’t in itself remove that risk, it can hardly be encouraging to the EU that the Labour government has not, as yet, made an explicit commitment even to seeking a DA deal on SPS, let alone to any more ‘expansive’ use of DA. As long ago as May 2023 I wrote a post with a footnote pointing out that whenever Labour politicians talked about an SPS deal they invariably invoked New Zealand (i.e. equivalence, not DA) as a model, and that has continued to be the case, so even in this headline area for the reset, the government still remains ambiguous about specifics.

For what it is worth, I think the government will seek DA on SPS, and will agree it with the EU, but it certainly hasn’t been open or enthusiastic about what doing so means, apparently because it fears the Brexiters’ reaction, hence again demonstrating the unsettled nature of the UK polity. So if the BfB report encourages the government to boldly advocate the use of DA, and to take on and defeat its Brexiter critics, then it will have done a good job.

On the other hand, if Brexitism were to be marginalised in the UK, overcoming this problem, then there would be no need to fiddle around with endlessly complex and sub-optimal MR agreements and security pacts as we could move, as quickly as possible, to joining the EU, boosting the continent’s economy, and developing a proper, fully-integrated, European defence and security capacity. So, for all the talk of the UK facing a choice between the US and the EU, the deeper choice that codes is the domestic one of what kind of country we are. That seems no closer to resolution now than it has been since, in 2016, we embarked on the poorly-designed, divisive and poisonous Brexit experiment, an experiment which has now become the most horrific of political lab accidents.

 

Note

*On the other hand, the British, Brexitist, variant of this global right-wing movement faces particular challenges. The British public has generally negative views about Putin and Trump, and a generally positive view of Zelensky (and support for Ukraine). Even Reform voters are strongly anti-Putin. As has been shown before Farage’s views of Ukraine and Putin are his most vulnerable political spot, and this is now becoming very clear.