Britain will bend to EU in or outside of it

Stellantis N.v

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. 

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