The UK government proposed the creation of a single market for goods with the EU as the centrepiece of an ambitious plan to reintegrate British trade into Europe, but EU officials rejected the idea, sources have told the Guardian.
During recent visits to Brussels, Michael Ellam, the Cabinet Office's top official on EU relations, presented the proposal. However, EU sources indicated that officials instead suggested a customs union or economic alignment through the European Economic Area (EEA), both of which are impossible under Prime Minister Keir Starmer's red lines, which rule out rejoining the EU, the single market, or the customs union, and accepting free movement of people.
UK government sources denied that the EU had definitively rejected the single market for goods, stating it was among options being discussed ahead of a summit tentatively scheduled for 13 July. Both sides hope to announce a veterinary agreement, an emissions trading scheme linkage, and a youth mobility programme, but Labour's efforts face similar obstacles to Theresa May's Chequers plan, which sought a 'common rulebook' for goods without free movement.
EU officials are wary of creating a special deal for the UK that could embolden Eurosceptic populists in member states, such as in France's 2027 presidential elections, or lead other countries to question their EU budget contributions. An EU diplomat said the bloc's approach was based on its interests, warning that treating a non-member better than a member would trigger internal debates on the fundamentals of EU cooperation.
A Cabinet Office spokesperson confirmed that a UK-EU summit will be held this summer, with negotiations ongoing for a food and drink sanitary and phytosanitary (SPS) deal and an emissions trading deal, which alone could add up to £9bn a year to the UK economy by 2040. The government also seeks deals on steel and electric cars, and deeper defence cooperation, including joining the EU's €90bn loan for Ukraine.
