Export led growth for the UK and UK-EU relations

On 15 January 2025, the House of Commons’ Business and Trade Committee (Committee) launched its inquiry on export-led growth. It aimed to identify policies and priorities to boost trade and support UK exporters. Its priority was to propose measures for the reset in UK-EU trade relations.

On 4 April 2025 the Committee published its draft “Green Paper” report “How to strengthen UK-EU relations” for consultation. On 15 May 2025 the Committee published its final report and recommendations to the Government. On 19 May 2025 following the UK-EU Summit in London on the same date (Summit), the respective leaders adopted three documents (Summit Outcome Documents): a Joint Statement, a Security and Defence Partnership and a Common Understanding on a renewed agenda for EU-UK cooperation (Common Understanding).

In this article we review the Committee’s recommendations, the related outcomes of the Summit, and the likely practical impact.

Following the Summit there was a marked difference between the messaging of the two parties. The Government presented what had been agreed as a series of completed agreements, essentially ignoring that it was mostly a list of matters to negotiate. However, the EU’s ambassador in London, Pedro Serrano, was reported to say that “the Summit provides a vision for the future of the relationship, and a roadmap for that future relationship, and now it’s about implementing”.

It is noteworthy that the EU appears to have departed from its refusal during the Brexit negotiations to allow the UK to “cherry pick” benefits of membership of the EU. For example, there are indications that the EU is willing to have closer relationships with the UK on agri-food rules and energy trading (as well as defence and security). But to participate in sectors of the EU single market, the UK must accept dynamic alignment with the EU (i.e. amend its rules to comply with any changes to the EU’s rules). In addition, the European Court of Justice (CJEU) will be the ultimate authority for all questions of EU law. Several years ago these concessions are unlikely to have been politically acceptable to the then Government.

As in the EU/UK Trade and Cooperation Agreement dated December 2020 (TCA), there is little focus in the Summit Outcome Documents on facilitating the export of services, on which the UK economy is mainly focused.

The Committee’s Recommendations and the related outcomes of the Summit

The Committee made 20 Recommendations in its final report. These can be summarised together with the related outcomes of the Summit as follows:

Defence and Security

1. “The UK Government should seek a new, deep UK-EU Security Pact, including a shared defence industrial strategy to ensure that Euro-NATO allies are procuring the best equipment and most potent capabilities-without regard to country of origin within our pool of allies-in the most efficient and rapid way”:

Summit outcome: The parties have established a Security and Defence (SD) Partnership to frame their cooperation in this domain, reported to be similar to those the EU has with six other countries. The document includes a long list of aspirations for the relationship, many expressing their exploratory nature. The Common Understanding allows the UK to negotiate participation in the EU’s EUR 150 billion loans-for-arms (SAFE) fund, which would be a boost for UK defence exports.

2. “Any new UK-EU security arrangements must include an explicit recognition that it would be mutually beneficial to act together to guard the critical national infrastructure on which the UK and EU business community depends, from those who wish it ill.”

Summit outcome: The SD Partnership includes a commitment by the parties to seek to cooperate to enhance the resilience of critical infrastructure in Europe, including underwater infrastructure.

Unfair trade practices by non-market economies

3. “The UK should work closely with the EU to strengthen coordinated action against non-market economies that undermine the international trading system through unfair practices, including use of forced labour, industrial subsidies, state-owned enterprise advantages, and forced technology transfers.”

Summit outcome: The SD Partnership includes a commitment to explore exchanging views on continuing to benefit from an open economy.

Economic crime

4. “To support the fight against economic crime, we urge the Government to explore how to maximise opportunities to deepen law enforcement cooperation with the EU, in particular to secure real-time intelligence exchanges.”

Summit outcome: The SD Partnership includes a commitment to strengthen cooperation to tackle illicit finance and corruption in third countries.

Free trading system

5. “The UK and EU both support a stable free trading system. Like the EU, the UK Government should join the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) to help uphold a functioning dispute resolution system while broader WTO reforms are negotiated.”

Summit outcome: The Joint Statement includes a commitment to continue to work together, and with other like-minded partners, to mitigate the impact of fluctuations in the global economic order.

Minimisation of trade burdens in Northern Ireland

6. “The minimisation of trade burdens in Northern Ireland [should be] a fundamental element of any future UK-EU reset.”

Summit outcome: On the proposal to link carbon markets, the Common Understanding states that the agreement should be appropriately “articulated” with the Windsor Framework. On the proposal for an EU-UK Sanitary and Phytosanitary (SPS) Agreement, the Common Understanding states that the continued application of the Windsor Framework would provide for Northern Ireland maintaining its privileged unique dual access to both the EU single market and the UK internal market.

SPS

7. “We support the Government’s intention to negotiate a SPS agreement with the EU to reduce the need for regulatory formalities and controls at the border for agri-food products, plants and animals.”

Summit outcome: The Common Understanding states that the UK and European Commission should work towards establishing a Common SPS Area via an SPS Agreement. This would result in the vast majority of movements of animals, animal products, plants, and plant products between GB and the EU being undertaken without the certificates or controls that are currently required. These benefits would be extended to movements between GB and Northern Ireland, through the interplay of the Windsor Framework and the SPS Agreement. The SPS Agreement should include food safety and general consumer protection rules on the production, distribution and consumption of agrifood products, the regulation of live animals and pesticides, the rules on organics and certain marketing standards. The SPS Agreement would ensure the dynamic alignment of GB rules with the EU rules, subject to limited agreed exceptions.

Fisheries

8. “A fair deal on fisheries [should] be reached”.

Summit outcome: The UK has agreed to extend EU fishing access to British waters for 12 years, until June 2038.

Red tape

9. “Maximise cuts to the red tape currently restricting free trade with EU”.

Summit outcome: Reducing trade friction is the key aim of the proposed SPS Agreement.

Rules of origin

10. “The Government should consult with industry on rejoining the Regional Convention on Pan-Euro-Mediterranean Preferential Rules of Origin [PEM] as an alternative to the rules of origin arrangements agreed in the Trade and Cooperation Agreement”.

Summit outcome: The Summit Outcome Documents include no specific provision. However, the UK’s Trade Strategy, published on 26 June 2025, includes a commitment to review further the question of UK accession to the PEM on page 46.

Maximising compatible regulation with the EU

11. “We recommend that the Government…identifies sectors of the economy where, over the next ten years, there could be mutual gains from maximising compatible regulation with the EU…It should also seek, where beneficial for both parties, mutual recognition of conformity assessments.”

Summit outcome: The Summit Outcome Documents include commitments in particular to working towards a Common SPS Area, working towards linking the parties’ respective emission trading systems (ETS), and exploring the UK’s participation in the EU’s internal electricity market.

Energy trade

12. “Energy trade represents a major opportunity for enhanced UK-EU trade and cooperation.”

13. “The UK and EU must prioritise energy cooperation in upcoming discussions”.

14. “The Government should seek to link, and keep aligned, the UK ETS and the EU ETS.”

Summit outcome: The UK and EU recognise the benefit of working towards a link between carbon markets linking the UK ETS with the EU ETS. The scope should include electricity generation, industrial heat generation, industry, maritime transport and aviation. The agreement should ensure the dynamic alignment of the UK with the relevant EU rules. The parties also recognise the benefits of exploring in detail the UK’s possible participation in the EU’s internal electricity market. Any agreements would require the dynamic alignment with EU rules.

Data

15. “We recommend that the Government monitors the EU’s Data Union Strategy upon its publication, assesses implications for UK policy, and take whatever steps are required to ensure a permanent data adequacy agreement is secured.”

Summit outcome: The Summit Outcome Documents include no specific provision. The Government’s response is awaited.

Financial services

16. “The Government should prioritise financial services in EU relations by using the EU-UK Financial Regulatory Forum to build on previous best practice and advance regulatory cooperation”.

Summit outcome: The Summit Outcome Documents include no specific provision. The Government’s response is awaited.

Innovation

17. “To achieve the best outcomes in terms of innovation and in turn growth, we urge that the Government make the case for all elements of European Research Framework Programmes, including FP10, to be open to third-country participation, and urge the Government to engage with UK research communities to maximise UK participation.”

Summit outcome: The parties welcome continued technical regulatory exchanges on new energy technologies such as hydrogen, carbon capture, utilisation and storage and biomethane.

Mutual professional qualification recognition

18. “We recommend that the Government draws lessons from the slow pace of mutual professional qualification recognition negotiations to date, reassesses which mutual recognition agreements would contribute most to our mutual recognition gain, and publishes a new roadmap of negotiating priorities for mutual recognition of qualifications.”

Summit outcome: The parties agreed to establish a dedicated dialogue on the mutual recognition of professional qualifications.

Touring artists

19. “We recognise the importance of reducing barriers to trade for touring artists.”

Summit outcome: The EU will “continue to support” touring artists, but the UK’s request for a special deal was not granted.

Youth mobility scheme

20. “The UK and the EU should consider the development of an ambitious, visa-based youth mobility scheme with a limited number of participants.”

Summit outcome: The parties recognise the benefits of working towards a balanced youth experience scheme on terms to be agreed. The scheme should facilitate the participation of 18 to 30-year-olds from the EU and the UK in activities such as work, studies, au-pairing, volunteering, or travelling for a limited period of time. It should provide a dedicated visa path and ensure that the overall number of participants is “acceptable to both sides”.

Other outcomes of the EU-UK Summit

In addition to the above, the Summit Outcome Documents include commitments to explore easier business visas and enhance cooperation in other areas related to exports such as maritime security and safety, smooth border management, competition law enforcement, and judicial cooperation in civil and commercial matters.

Conclusion

The Summit highlighted the policy areas where the parties want to cooperate further. In addition to emission and electricity trading and a SPS agreement, the Common Understanding anticipates agreements on matters such as fishing and carbon trading, which may facilitate exports.

Although exploratory talks have occurred, formal negotiations must await the European Commission securing a mandate on each topic from Member States via the EU Council. Priority is likely to be given to fishing and energy and negotiating the UK’s access to the EU’s EUR 150 billion defence fund. Indeed, the Partnership Council of the TCA has already formalised some aspects of the political agreements on energy and fisheries that were reached at the Summit.

Press reports quote Mr Serrano as suggesting that by May 2026 “hopefully we will have an agreement on SPS. We will have another agreement on the implementation of SAFE, we will have an agreement on the youth experience scheme, we will have implemented a number of decisions on further cooperation on justice and home affairs. We will be hopefully as well… advancing on electricity…”.

The Summit represents significant steps towards a closer relationship between the UK and EU, but much remains to be agreed even in the limited areas progressed at the Summit. The Government’s red lines on not re-entering the EU single market (except for electricity) nor customs union (other than Gibraltar) limit the scope for getting closer to the EU. Similarly, not all of the Committee’s recommendations on facilitating exports were progressed at the Summit. The Government’s response on the Committee’s recommendations is due by 15 July 2025.

Meanwhile, the UK’s Trade Strategy includes the following comment on page 58: “Nothing matters more to traders across the UK than reduced trade frictions with our biggest trading market: the EU. We will continue to seek conditions for smoother trade through our ongoing dialogue with the EU, but it is a constantly evolving picture as EU regulations change and are updated.”