European Commission Vice-President Maroš Šefčovič has confirmed that the post-Brexit trade agreement will inevitably lead to extra costs for both EU and UK businesses, thereby cooling down any expectations of a major overhaul of the current deal.
The Trade and Cooperation Agreement (TCA), active since the UK left the EU’s single market in December 2020, allows for tariff and quota-free trade across the Channel.
According to Šefčovič, the changed trade dynamics mean an inevitable increase in business costs. Over time, this divergence may lead to even higher costs and deepen trade barriers between the EU and the UK. This sentiment echoes previous statements and further adds to the uncertainty for businesses, emphasising the need for strategic planning and professional advice.
The UK Government seems to have reduced its efforts to move away from EU standards across various economic sectors, with plans to repeal EU laws on the UK statute book considerably scaled back this year. UK Foreign Secretary James Cleverly indicated that policy areas like migration, security, energy, and climate change are domains where the EU and UK could strengthen their cooperation.
However, the UK’s involvement in EU military support programs, such as supporting Ukraine against Russia’s invasion, is only on a case-by-case basis. Regarding energy policy, the UK Government initiated a consultation on establishing a domestic equivalent of the EU’s Carbon Border Adjustment Mechanism but is confronted with the potential of high business costs unless it aligns with the EU’s regime.
The London School of Economics has issued a warning that such a levy could cost UK companies just under £1 billion per year, severely impacting steel exporters. Negotiations between Brussels and London for granting the UK associate status with the EU’s Horizon Europe research program remain at a standstill due to disputes over the UK’s financial contribution.
David Lammy, foreign affairs spokesperson for the Labour Party, has suggested that a review of the TCA would present a potential Labour government with a chance to analyse on a “sector by sector” basis how the UK can improve its work with the EU.
Despite calls for rebuilding relations, Šefčovič played down the possibility of a significant overhaul of the EU-UK relationship, emphasising that the TCA hasn’t been fully utilised yet. EU officials further stressed that any review wouldn’t begin until 2026 and that it would be a review, not an amendment of any kind.
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