Britain will bend to EU in or outside of it

BYD

01/10/2026 09:44

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Jon Sindreu
LONDON, Oct 1 (Reuters Breakingviews) - Brexit was supposed to grant the United Kingdom access to an à la carte menu of trade, tilting towards Europe, the US or China as circumstances demanded. Instead, increasingly aggressive economic competition among all three blocs has left Britain staring at an ample all-inclusive buffet with the only edible choice – the EU – being the one it already sent back to the kitchen.
On Wednesday, UK Prime Minister Andy Burnham told the BBC he is weighing a range of options for a long-term relationship with the EU, ranging from the status quo to a customs union to rejoining the bloc. So far, Britain has been playing the middle, edging closer to Brussels while scrambling to preserve its "special relationship" with Washington and softening its stance toward Beijing. 
In theory, escaping EU treaties may have allowed for some well-placed, independent industrial policy. But Brussels turning defensive against China and the United States has closed that window of opportunity. According to the Financial Times, EU officials had been pressuring Burnham to rejoin the customs union, using inclusion in "Made in Europe" subsidies and public procurement policies as leverage. Failing that, they expected the UK to match the bloc's anti-China measures, which it didn't do in 2024 when Brussels hiked tariffs on Chinese battery-electric vehicles to as much as 45%. These discussions will now be pushed into next year, the FT said Wednesday, so that an agreement can be reached on a youth experience programme, linking emissions trading schemes and removing trade barriers on food.
The stated fear from the EU and some auto executives is that China could avoid tariffs by routing exports through the UK. But this makes little sense: under the 2021 EU-UK trade agreement, Chinese-made EVs are still Chinese. To qualify for tariff-free trade, they need at least 45% UK or EU originating content — set to rise to 55% from 2027. 
It’s more likely that Brussels is worried that China will set up factories in the UK to sell into the continent. Nissan Motor 7201.T, for instance, is partnering with China's Chery at its Sunderland factory, which could take market share from the likes of Volkswagen VOWG.DE and Stellantis STLAM.MI. 
Chery Automobile 9973.HK already has operations in Spain, as does BYD 002594.SZ in Hungary. But a big part of the EU's proposed Industrial Accelerator Act is ensuring that foreign investments in strategic industries deliver European jobs, local content and technology transfer. To be a "trusted partner," London will probably have to accept comparable safeguards, even if that means giving up on becoming a preferred gateway for Chinese investments. For industries under pressure, including cars and chemicals, alignment seems inevitable. 
Of course, this needn't mean choosing a customs union over a Swiss-style patchwork of bilateral arrangements. Either would leave Britain taking rules without a say, but the latter would preserve some scope for selective access to US markets. Meanwhile, EU re-accession is a political and bureaucratic nightmare. Regardless, the EU will remain the nearest economic superpower. And, in trade, geography trumps almost everything else.
     
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CONTEXT NEWS 
British Prime Minister Andy Burnham has agreed the outline of a new deal with the European Union ahead of a summit in November, the Financial Times reported on September 30 citing officials briefed on the preparations. It will include a youth experience scheme, the removal of trade barriers on food and the linking of emissions trading schemes. According to the FT, Brussels had previously pressured London to become part of the bloc's customs union in order to participate in "Made in Europe" industrial policies, but these discussions have been pushed into next year.
Burnham told the BBC on September 30 that he will explore a range of possible options for a long-term relationship with the EU, including the status quo but also rejoining the customs union or the single market, or even asking for full membership to be restored. 
EU trade commissioner Maroš Šefčovič is scheduled to meet his Chinese counterpart Wang Wentao in Beijing on October 8 and 9 to seek tougher safeguards against a flood of Chinese exports. One possibility would be for the EU to extend tariffs on electric vehicles to include hybrid cars. 

(Editing by Aimee Donnellan; Production by Streisand Neto)
((For previous columns by the author, Reuters customers can click on SINDREU/Jon.Sindreu@thomsonreuters.com))