Resetting the UK-EU Relationship (European Affairs Committee Report)

Baroness Meyer Excerpts

Thursday 26th February 2026 Lords Chamber

[Baroness Meyer (Con)]

My Lords, today’s debate is ultimately about the national interest. Would a closer relationship with the EU best serve the UK’s economic and strategic needs as an outward-looking global nation? The Chancellor has described stronger EU ties as the country’s “biggest prize”, but would they materially improve growth and living standards? How much would they cost the taxpayer and what trade-offs would be required?

Since leaving the customs union, we have regained important freedoms. I will not list them here as we have only four minutes and the list is too long. That flexibility matters, particularly in industries such as AI, life science and fintech, which will define our future prosperity. A customs union would require us to apply the EU’s external tariffs. It might reduce some of our trade bureaucracy, but not eliminate it. It would mean less autonomy while offering only partial market access. Take food prices for instance: we already trade tariff-free with the EU, and global sourcing from other countries, such as Australia and New Zealand, can keep costs down. We also no longer make regular net contributions to the EU budget—a substantial fiscal saving. Meanwhile, parts of the EU economy face high debt and slow growth. The EU will no doubt negotiate firmly in its own interest. On this occasion, considering that it has a big budget deficit and is angry towards the UK for leaving the European Union in the first place, it will negotiate particularly hard.

History shows that success in Brussels requires clarity and resolve. Margaret Thatcher secured a substantial rebate by being clear and firm, a big chunk of which Tony Blair later gave away under pressure from the member states. The 2016 negotiations under David Cameron showed just how difficult it is to secure concessions from Brussels. Recent experience, including Chagos and the current EU talks, raises serious doubts about whether this Government can really stand up for Britain’s best interests. The Prime Minister speaks of red lines on the single market and the customs union. How can we be confident, however, when the committee itself has pointed out that there are no clear negotiating objectives? Without a clear plan and a firm bottom line, red lines may sound strong, but they will no doubt prove to be flexible.

Regulatory alignment rarely comes without conditions, financial contributions, legal obligations or constraints on domestic policy. The Prosperity Institute has warned that such a reset could deliver limited gains and increase costs for British businesses. I therefore ask the Minister: what precisely are the benefits of this reset, and what is the price in money, control and flexibility? If growth is our objective, should we not prioritise domestic reform, competitiveness and broader global trade with the economies growing faster than the failing EU economies, which would truly benefit our long-term interest?