UK must rejoin EU customs union, says Lib Dem Davey

The UK should discuss a recent customs union deal with the European Union, Liberal Democrat chief Sir Ed Davey has said.

In a talk in London, he argued it was needed to boost Britain’s economy and its ability to deal with the incoming Donald Trump presidency from a position of strength.

The policy was a practical shift to “turbocharge” the economy and a step towards the eventual Lib Dem objective of rejoining the EU, a event source told the BBC.

Sir Ed also warned that Trump could not be relied on to “play by the rules” or to stick to international agreements.

He said Trump should be offered a state visit to the UK, but only if he delivered financial and military back for Ukraine.

Countries in a customs union consent not to impose charges – known as tariffs – or custom checks on each other’s goods, but under EU rules they can not strike their own trade deals either.

Prime Minister Sir Keir Starmer has called for a reset in relations with Brussels, but has ruled out rejoining the customs union or the EU’s single trade – which guarantees the free movement of goods, financing, services and people within it.

Business Secretary Jonathan Reynolds said the Lib Dems “only ever ponder about Europe”.

“Of course, it is a major trade, but this is a government that wants to enhance that connection with the EU but also wants to do work with the US, with India, with the Gulf,” Reynolds told BBC Breakfast.

“I ponder the UK could be positioned as the best economy between those major market activity blocs and I ponder what the Lib Dems are saying today is not taking into account that wider global position”.

Sir Ed’s talk was his first to focus on relations with Brussels since he became Liberal Democrat chief following the 2019 general election, when the event’s campaign to stop Brexit saw it slump to just 11 MPs.

At last year’s general election, the event gained a record 72 seats on the back of a campaign that barely mentioned the EU at all, even though rejoining the bloc remains the event’s long-term aim.

Sir Ed’s call to rejoin the EU customs union was not ideological, event sources said, but about putting the UK in the best feasible position to deal with the recent Trump administration and the EU.

Trump has threatened to impose tariffs on US imports after he returns to the White House next week, sparking anxiety in many countries that depend on exports.

Sir Ed attacked the government for rejecting a recent customs union with the EU, saying it would be the best way to tear down trade barriers and “turbocharge our economy in the medium and long term”.

He urged ministers to discuss a deal with the EU this year, with the aim of forming a fresh customs union by 2030, arguing this would allow the UK to “deal with President Trump from a position of strength, not weakness”.

In his talk, the Lib Dem chief argued the UK needed to be far more ambitious and to act with far more urgency, “not just tinkering around the edges of the botched deal the Conservatives signed four years ago”.

There are no tariffs or other barriers to trade between countries in the EU customs union – which the UK left in January 2021 when Brexit took result.

But member countries impose ordinary tariffs on all goods entering the union from outside.

Sir Ed also accused Conservative chief Kemi Badenoch of wanting to leave “cap in hand” to President-elect Trump and “beg for whatever trade deal he’ll provide us”.

He described Reform UK chief Nigel Farage as “fawning over Trump and licking his boots”, and being “more interested in advancing Trump’s agenda over here than the UK’s interests over there”.

“If we seem as frail or as desperate as the Conservatives or Reform would have us appear, Trump will treat the UK the same way he has treated so many throughout his career”, Sir Ed argued.

The UK’s market activity relationships with its European neighbours, or other partners such as Canada and India, can be strengthened “so much faster”, he said.

Reform’s deputy chief Richard Tice told the BBC the Lib Dem call for a recent customs union deal showed “how clueless they are because President Trump is much more likely to impose tariffs on the European Union”.

He said Trump was “delighted” the UK had left the EU and questioned why it would desire to get closer to “an ailing economic model”.

The Conservatives have been approached for their response to Sir Ed’s comments.

In a talk she will deliver on Thursday aimed at rebuilding depend in the Conservatives, Badenoch will admit her event made mistakes while in power – including on Europe.

“We announced that we would leave the European Union before we had a schedule for growth outside the EU,” she will declare.

Official figures released on Thursday indicate the UK economy grew in November for the first period in three months – after shrinking in September and October.

The profit to growth will be welcome for the government after recent turbulence in financial markets pushed its borrowing costs to their highest level in years and the worth of the pound fell.

But the 0.1% boost in the size of the economy was smaller than most economists had predicted.

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