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the Centre for European Reform. Today is the day of the Bank UK EU Summit and this morning we heard news that the UK has now struck a deal with the European Union covering issues from security to immigration to fisheries. James, what do we know so far about what's actually included in this deal? So, at the time of recording, it's 10am, we're expecting to have a press conference by Keir Starmer at 12.30 midday, and then there's going to be a big slap-up lunch on the Thames, but as of...
our understanding. So talks went on late last night and one of the key sticking points has been about fisheries rights under the Brexit deal struck with Boris Johnson. The current rules governing that are due to expire next year.
And the reports this morning suggest that there's been a 12-year extension to that existing deal. Already you've got people who reform, conservatives, etc., saying it's things like the Great Starmer sellout, etc. Lots of talk about that, so that's going to be a hugely evocative topic, I think. But what we know so far is there's going to be a deal in a few key areas, one of which is sort of potentially lifting some of the restrictions on so-called sanitary and physiosanitary products.
those are going to be things like sort of agricultural products etc bringing them in and out of the European Union and the UK there's also going to be some suggestions of a defence pact signed between the UK Although we don't know how extensive that's going to be, the key sticking point on that has been about this new security agreement for Europe, SAFE is known as.
It's a sort of £150 billion defence deal, which the UK wants access to. It wants its company to be able to... access all that funds and money etc. The French we believe are quite... restrictive of that, and they want to limit it to just European-wide companies. Other countries, we believe Germany, etc., are more willing to countenance Britain's involvement in that, the Nordic countries, the Baltic states. So we wait to see if that's going to be sort of...
Is that going to be actually sort of guaranteeing those companies' rights or setting out a timescale on that? Or will it be sort of something like a new forum for the UK and EU to discuss defence negotiations? And much of what it's likely to come out today has been discussed, but there were some sort of revelations over the weekend, one of which is this new win that the British are going to be trumping, which is going to be about the passport gate.
which will hopefully allow UK passengers into the EU to have less of a weight in passport queues and also potentially in terms of what the EU gets. There's a discussion around having a reduced rate for EU students at UK universities. Currently they pay the level of international students.
although this morning some on the British side have been pushing back a suggestion they'd pay the same rate as British students, so £9,250 a year. The suggestion is they will pay a lower rate than possible. So we're going to see all of this, but I think it's going to be one of those classic things where you'll do the press conference, you'll hear about the wins from the British side.
But then we need to see about the costs and what kind of timescale we're working on. Yeah, I can imagine the passport gates will be as significant when they'll be pushing. Charles, from what we've seen of it so far, is this a good or bad deal? for Britain and as some weekend papers have suggested a Brexit betrayal. I think it's a good deal for Britain and a good deal for Europe but not very ambitious unfortunately. I would have liked to see more emotion on both sides.
But the EU is quite inflexible in many respects, as we'll come on to, and the UK is lacking ambition because it doesn't seem to be too pro-EU or talk about the EU too much for fear of losing votes to reform the UK. So it's not as ambitious as I would have liked to seem.
the very fact there is a summit the first since Brexit is a good thing in itself I think it'll set a pattern for future summits we're going to see a permanent negotiation that will go on forever and ever between the UK and the EU just like the EU has with Switzerland there'll be summit after summit and more things will get done in the future I think
In the long run, we can expect a more ambitious kind of settlement between the UK and the EU, but the UK has to restore trust with its partners. The UK has lost a lot of trust over the last few years.
and the EU has to learn to be more forward-looking and get beyond the Brexit years as well as the UK does. I think in the long run we can be more optimistic about what we can achieve. Yeah, you talk about trust. I suppose we heard over the weekend that there may be some sticking points, some challenges. and coming to this negotiation and making sure that it happened today.
Can you tell us a little bit more about some of the issues that we heard about and what you'd like to see in terms of going forward? Well, let me highlight two things which are very important. Firstly, the security and defence partnership, which is important. It's not a legally binding document, it's just a bit of paper saying we'll cooperate very closely. There's a common concern like mobility on the European continent.
allowing the British to take part in EU military missions if necessary, collaborating on cyber security and so on. So the very fact that we're doing this in the current geopolitical situation is important because Both the UK and the EU want to get closer on security. The very threatening world we live in with Putin on the east of the European continent and Trump creating problems to the West.
unstable Middle East that we must work together more closely on security and I think this will allow us to do so in setting a signal for the future. That's a very important change. The second important thing is this technical thing, SPS, sanitary and phytosanitary measures. British food exports have fallen 20% to the EU since Brexit because of the bureaucracy at the border now.
This deal will require the EU to accept so-called dynamic alignment in the jargon. That is when the EU changes its rules, the UK must change its rules to follow the EU rule change. They will be consulted on the changes. There'll be a decision-shaping mechanism, not a decision-taking mechanism. This is very important because if you do a deal that accepts EU food standards in perpetuity effectively, that means there won't ever be a free trade agreement, a full-blown one with the United States.
Because if we're following EU standards, we won't be able to let in chlorine-washed chicken and almond-treated beef, which is the main demand the US makes for a full free trade agreement. So there never will be a full free trade agreement with the US. but it will make life much easier for Northern Ireland because if you have similar standards in the UK and the EU then goods travelling from Great Britain to Northern Ireland won't have to be
go through so much bureaucracy at the border that the checks can be much lighter. And the final point I make about this is that it is a precedent if you have a president of dynamic alignment in one area to make it easier for British exporters. There's no reason why we shouldn't move on to other areas. I think electricity trading is one area that we should look at. We can get cheaper electricity going across the channel in both directions if we go back to being a de facto in the single market.
We'd have to accept the rules of the EU to do that. Both sides would benefit from cheaper electricity and more security of supply, I believe. And James, there's been several controversial aspects of this deal that have been... talked about in recent weeks particularly the Youth Mobility Scheme. Starmer last week made a speech about immigration
and there are obviously concerns about people coming into the country. How does he square that particular circle when he talks about having a mobility scheme with people from the EU? So this morning, Jonathan Reynolds, the Business Secretary, was asked this question. He confirmed that there is going to be a youth mobility scheme.
It will be capped, but of course he refused to put a number on that cap. I think the reports we've seen suggested around 40,000 or so coming for a two-year period. That would seem to be in the right ballpark. The question is, of course, what do you get in return for that, given how much of a concern migration is, particularly with Labour versus that reform flank?
The understanding is potentially there's going to be some great cooperation on matters of border security. The UK wants to have access to some of the European Union databases in order to make it easier to...
smash the gangs, to use the Starmer phrase. So that's the hope of winners. Basically, you know, look, we allow some young people in Europe to come to this country in return. They will go back after two years. We will also be able to clamp down on the sort of really vicious, nasty criminals, etc. That's the hope of it.
I think there's a challenge for both sides in terms of domestic political opinion here. For the Brexiteers, on the one hand, as Charles says, I don't think this is a particularly ambitious or far-reaching deal. Therefore, do they then raise the stakes to 100 and then say, this is a betrayal, etc., we've been really betrayed?
Or do they try and dismiss it and rubbish it as sort of a piecemeal change, which actually isn't particularly much in the interest? I think that's an interesting challenge to the Brexiteers in terms of political opinion and trying to shape that. On Starmer's side, I think, look, as we talked about, I think he can present some of his stuff as sort of common sense wins. The great thing for every politician is if they can present their arguments as the common sense.
in a real politic argument. And I think that he can do that on things like the passport gates, probably. The danger is that he then becomes this division between somewheres and anywhere. in the sense of people who have a sense of place, like the fishermen of Grimsby, for instance, they are a somewhat group.
those who are jolly middle-class students who are going to now get access, we understand, onto the Erasmus scheme can be dismissed anywhere. And I think that that is a potential argument that's going to be used against him. So I think the key thing for him is to say that he, you know, I think...
would be to emphasise that this would be the continuation of Boris Johnson's phishing deal, to try and sort of blame the worst bits of this on the Tories, while also trying to package it as a way in which that will boost the economy, even though, of course, as Charles has already said, this isn't the kind of far-reaching deal that I don't think will make a huge...
amount of change to the UK's growth prospects. Yeah Charles on that I suppose in terms of economic benefits is this still likely to confer anything that's particularly noticeable or is that much more down the line? I think James is right. I don't think there'll be significant effect on the British economy. My own colleagues at the Centre for European Reform have crunched some numbers and if you say what is the economic impact of a deal on SBS, that's the plant and animal health.
plus a deal on youth mobility, plus touring musicians. The answer is British economy benefits by about 0.3% a year, which is useful and helpful. But given that Most estimates of the cost of Brexit put it at 4% or 5% cost to the British economy. So it's not going to change the weather hugely. So long as the UK keeps its red lines of no single market, no customs union, no freedom of movement.
There's a limit to what you can do to improve the economic relationship with the EU. You can do a bit and the government's going to try and do a bit. In my own view, you can go further in the long run, sector by sector. Having started with SPS and then moved on to energy, you can do maybe pharmaceuticals and chemicals in a few other areas. But at a certain point, they will say, hey, stop.
you want freedom of movement. If you're going to be back in the single market, you have to have freedom of movement. I think there's a limit to how far we can go, but we can go further than we've gone now. But I think, overall, James is right that there's not going to be a rocket booster on the British economy, which the Treasury would like to see. But it's better than nothing. It's a step in the right direction. I'll probably just have a footnote on fish.
The government was clever if it could sell the fish deal in a positive spin because ever since Brexit British fishermen have got a greater share of the quotas in British waters every year since Brexit, since the Brexit settlement was done. The EU has now, the EU quota has gone down by, they've only got 75% of the fish they used to have before Brexit. And the deal... that'll be signed off today will basically give the EU what it's got today, which is a lot less than it used to have before Brexit.
If the government's clever, they can sell the Brexit deal. It's quite a good deal for British fishermen, I think. And I think, James, going back to the politics of it all, you talked to me about how Brexiteers might want to put forward counter-arguments against What Labour will be saying about this deal?
I suppose there's an interesting point. Starmer seems convinced that 10 years on from Brexit, people are less concerned necessarily about those types of constitutional things and are more concerned about their quality of life, trying to model himself as a sort of post-Brexit Prime Minister. Do you think that he is right to do that? I think that there's no real political game to be. visited by going back to those divisions.
And actually, you know, if you look, go back to Boris Johnson, you know, Brexit was done after 2020, according to him and the rhetoric. And so the edict went round across Whitehall that they were not to use the phrase, you know, Brexit, etc. It was all done, put it to bed because we voted to get Brexit done. The reality, of course, is that...
We're going to have a continual rolling series of summits. So this is just the beginning, not the end. Lucky Coffeehouse Shots listeners. But obviously the defence of that would be that the role of the EU will be much less in UK policymaking than it used to be. So I think he's probably sensible not to go back and sort of talk about...
Michael Foot style, what side were you on at Marston Moore? What side were you on on 23rd of June, 2016? But I think the key challenge will be to test the waters with this kind of deal. See, really, does it resonate with the public? There's been some suggestions perhaps that, you know, For instance, Reform want to move on from the Brexit years, and Farage is now reaching out. I think the Farage party is winning more Remain voters than the Greens are, for instance.
I think we need to, you know, those terminology from 10 years ago, I think the debate has changed. European Union has changed as well in terms of sort of the complexion of it and sort of the future direction as well.
So I think that Simon is probably sensible to do that. The key thing is going to be about consistency. And obviously last week he was, for instance, very critical in migration. This week he's going to be having a youth mobility scheme. I think there is a way to sort of square that circle and that you can talk about sort of...
you know, Labour's very keen to talk about legalistic migration, sort of people playing by the rules, etc. But I think that he has to be very careful, of course, given that the potency of some issues, you know, fishing, for instance, obviously pays less in taxation than only... which I understand is a popular subscription-based site. OnlyFans pays more on HMRC than the phishing industry. Yet polling shows for the Good Growth Foundation, Labour-linked think tank,
that has a hugely symbolic point. So all those things may not cut from residence. And although the public overall thinks that Brexit has been a mistake since around 2022, I think these things can flare up. So I think it's probably broadly Keir Starmer's right thing to do, which is sort of take the wins, trumpet those. politically, and try to emphasise our insuffisions. Just to say one other thing, I mean, there'll be lots of people talking about Labour, Leavers, etc. in there.
I would just be wary about my senses from talking to Labour MPs and the Parliamentary Party. They are pretty behind this. There are some, you know, like Joe White, who's the MP for Bassett Law, who've come out. But I think it is striking the ones who are the most public critics on the record thus far, with this cruel change, but thus far.
those from the 2016 side, so people like Kate Hoey, et cetera, rather than some of the new in tech, who I think are more pro-European than some commentators might sometimes believe. Thank you, James. Thank you, Charles. And thank you for listening.