In a scathing rebuke of the Labour government’s economic policy, Liberal Democrat leader Ed Davey has labeled the rejection of the European Union’s offer for the UK to join a Europe-wide customs scheme as “an act of economic negligence.” Davey’s criticism comes after a minister confirmed that the government is not currently seeking to participate in the Pan-Euro-Mediterranean Convention (PEM), a trade arrangement that could significantly reduce barriers for UK businesses.
The PEM is a set of common rules that allows parts, ingredients, and materials for manufacturing supply chains to be sourced from across dozens of countries in Europe and North Africa without incurring tariffs. Many firms argue that joining this scheme would help the UK rejoin complex supply chains that have been disrupted by post-Brexit customs barriers, providing a much-needed boost to the nation’s flagging economy.
Prioritizing China Over Europe?
Davey expressed alarm that the government seems willing to negotiate with China but won’t even consider a more advantageous trading arrangement with the UK’s closest neighbors in Europe. He accused the Labour leadership of borrowing from “Boris Johnson’s playbook on European negotiations,” a strategy he predicted would lead to bitter disappointment.
“It is time for a proper UK-EU customs arrangement so we can strengthen our negotiations with Donald Trump, cut the red tape on our businesses and grow the economy.”
– Ed Davey, Leader of the Liberal Democrats
A “Running Commentary” on Missed Opportunities
The government’s stated position is that while it welcomes the “positive, constructive tone” from EU Commissioner Maroš Šefčovič, who floated the PEM proposal, it does not currently have any plans to join the scheme. A minister said the government is “not going to provide a running commentary” on every comment made about post-Brexit trade arrangements.
However, critics argue that the government’s refusal to seriously engage with proposals to reduce trade friction amounts to a “running commentary” of its own – one that prioritizes ideological purity over pragmatic solutions to support UK businesses and boost economic growth. As the UK economy continues to lag behind its European peers, pressure is mounting on the Labour government to reconsider its stance.
The Brexit Aftermath
The debate over the UK’s post-Brexit relationship with the European Union continues to rage nearly three years after the country formally left the bloc. While the government has repeatedly ruled out rejoining the single market, customs union, or restoring freedom of movement, many businesses and economists insist that closer alignment with Europe is essential to unlocking growth and prosperity.
As the Labour government grapples with a stagnating economy, soaring inflation, and a cost-of-living crisis, its decisions on trade policy will come under increasing scrutiny. The question remains: Will the desire for a “clean break” with Brussels continue to trump the economic imperative of reducing barriers and facilitating trade with the UK’s largest and closest trading partner?
🚨 The government's rejection of the EU's customs scheme offer is an act of economic negligence.
— Ed Davey MP 🔶 🇬🇧 🇪🇺 (@EdwardJDavey) January 23, 2025
It's alarming they'll negotiate with China, but won't even consider a better deal with our closest neighbors.
We need a UK-EU agreement to cut red tape & grow the economy now.
As the debate rages on, one thing is clear: The decisions made in Westminster in the coming months and years will have far-reaching consequences for UK businesses, workers, and consumers. Only time will tell if the government’s current approach to trade with Europe is a manifestation of principled policy-making or, as Davey and other critics contend, an egregious act of economic negligence.
