Policy & Compliance
As the Trade and Co-Operation Agreement reaches its fi fth anniversary, the UK government is attempting to renegotiate fi ve main areas – although only one relates to trade The EU-UK re-set: managing expectations
be re-negotiated – and such matters often proceed with glacial slowness. Closer alignment Sir Keir Starmer has said the UK should move towards closer alignment with EU markets “if it’s in our national interest”. The prime minister, in early January 2026, told the BBC’s Laura Kuenssberg it would be “better looking to the single market rather than the customs union for our further alignment”. In certain ways this policy is an inevitable outcome of the UK securing free trade agreements with other countries outside the EU bloc. It must be remembered that the EU, as a bloc, is the UK’s largest trading partner, accounting for 41% of UK exports and roughly half of the nation’s imports. However, trade with the EU is unlikely to grow significantly as demand in Europe remains weak (estimated to be 1.1% in 2026). There are particular
M uch has been written about the fi rst review of the Trade and Co- Operation Agreement (TCA) between the EU and UK. This is largely because 2026 represents the tenth anniversary of the referendum that ended the UK’s membership of the EU. Also, it is the fi rst such review and there have been signi fi cant political changes, particularly in the UK, since the referendum. The EU Commission had made it
clear to the then Conservative government that its intention was that this first review would be an opportunity to assess the functioning of the agreement. No serious re-negotiation was under consideration at that time. This changed when the Labour government, which had ambitions to foster closer ties with the EU, came to power. When the May 2025 summit between the two sides was announced, it became and is still clear that much had to
24 | February 2026
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