UK needs to rejoin EU customs union, says Lib Dem leader Ed Davey
2025-01-16
Category: economic

The UK should negotiate a new customs union deal with the European Union, Liberal Democrat leader Sir Ed Davey has said.  In a speech in London, he argued it was needed to boost Britain's economy and its ability to deal with the incoming Donald Trump presidency from a position of strength.The policy was a practical move to "turbocharge" the economy and a step towards the eventual Lib Dem goal of rejoining the EU, a party source told the BBC.Sir Ed also warned that Trump could not be relied on to "play by the rules" or to stick to international agreements.      He called for Trump to be offered a state visit to the UK, but only if he delivered financial and military support for Ukraine.  
The president-elect "craves" the pageantry at Buckingham Palace and a banquet with the King, Sir Ed said. The Lib Dem leader's speech was highly critical of Trump, who will be sworn in for his second term in the White House on Monday, describing him as "the first convicted criminal" to take the oath of office.Sir Ed noted that Trump had praised President Putin's invasion of Ukraine as "genius", said "trade wars are good", and called himself "tariff man".  The new US administration would be "a threat to peace and prosperity" around the world, he warned. But "The Donald" could not be ignored and had to be dealt with, he added.  Sir Ed accused Conservative leader Kemi Badenoch of wanting to go "cap in hand" to Trump and "beg for whatever trade deal he'll give us". He described Reform UK leader Nigel Farage as "fawning over Trump and licking his boots", and being "more interested in advancing Trump's agenda over here than the UK's interests over there"."If we seem as weak or as desperate as the Conservatives or Reform would have us appear, Trump will treat the UK the same way he has treated so many throughout his career", he argued. The UK's relationships with its other trading partners, including its European neighbours, should be strengthened urgently to show Trump Britain "won't be  bullied", he said.  Reform's deputy leader Richard Tice told the BBC the Lib Dem call for a new customs union deal showed "how clueless they are because President Trump is much more likely to impose tariffs on the European Union". He said Trump was "delighted" the UK had left the EU and questioned why Britain would want to get closer to "an ailing economic model". The Conservatives have been approached for their response. Countries in a customs union agree not to impose charges - known as tariffs - or custom checks on each other's goods, but under EU rules they can not strike their own trade deals either. Prime Minister Sir Keir Starmer has called for a reset in relations with Brussels, but has ruled out rejoining the customs union or the EU's single market - which guarantees the free movement of goods, capital, services and people within it.Business Secretary Jonathan Reynolds said the Lib Dems "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," Reynolds told BBC Breakfast."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".
'Not ideological'  
Sir Ed's speech was his first to focus on relations with Brussels since he became Liberal Democrat leader following the 2019 general election, when the party's campaign to stop Brexit saw it slump to just 11 MPs.At last year's general election, the party gained a record 72 seats on the back of a campaign that barely mentioned the EU at all, even though rejoining the bloc remains the party's long-term aim.Sir Ed's call to rejoin the EU customs union was not ideological, party sources said, but about putting the UK in the best possible position to deal with the new Trump administration and the EU.Trump has threatened to impose tariffs on US imports after he returns to the White House next week, sparking anxiety in many countries that rely on exports.Sir Ed attacked the government for rejecting a new customs union with the EU, saying it would be the best way to tear down trade barriers and "turbocharge our economy in the medium and long term". He urged ministers to negotiate a deal with the EU this year, with the aim of forming a fresh customs union by 2030, arguing this would allow the UK to deal with Trump "from a position of strength, not weakness".There are no tariffs or other barriers to trade between countries in the EU customs union - which the UK left in January 2021 when Brexit took effect. But member countries impose common tariffs on all goods entering the union from outside.Official figures released on Thursday indicate the UK economy grew in November for the first time in three months - after shrinking in September and October. But the 0.1% increase in the size of the economy was smaller than most economists had predicted. The figures follow recent turbulence in financial markets which has pushed government borrowing costs to their highest level in years. 
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