EU rejects UK push to create a single market for goods

The EU has rebuffed a UK government push to access its single market for goods ahead of a summit set for July.

Britain had suggested it aligned with EU regulations to enable companies to trade freely with the 451mn-strong bloc in an attempt to kick-start moribund growth.

But the European Commission late on Friday said it would only discuss the “reset” package of measures agreed at last year’s summit along with co-operation on defence and migration.

Two EU diplomats told the FT that the idea of a single market for goods was rejected, although it could be revived as a future area of work at the summit, expected in mid-July.

The offer from Michael Ellam, the UK’s negotiator with Brussels, was only shown to a handful of member states that raised objections to the idea, they said.

“One concern was the UK could get a better deal than member states” by undercutting regulations, they added. “The UK did not want dynamic alignment on services. And many goods now include services, so there is a competitiveness issue. It would not be a level playing field.”

The UK would also not accept freedom of movement — one of the so-called four freedoms alongside goods, services and capital that underpin the single market. However, there was a “tacit understanding” it would contribute to the EU budget if a deal could have been agreed, according to the diplomats.

Member nations also said it was unfair to states such as Norway and Switzerland, which allow EU citizens to live and work in their countries in order to participate in the single market.

However, one of the diplomats said: “Member states told the Commission not to close the door. We welcome the ambitious thinking.”

A Commission spokesperson excluded the idea when asked to comment, focusing on the three agreements where talks were under way, including a veterinary deal that would reduce barriers to agrifood trade, a plan to link emissions trading systems and a mobility scheme for 18 to 30-year-olds.

“In view of the next summit, we are working to conclude the key files of last year’s Common Understanding: an SPS [sanitary and phytosanitary, or veterinary] agreement, ETS linkage, and a youth experience scheme, and to advance work on electricity trading.

“We also see scope to deepen co-operation where it matters most now: defence industrial co-operation, in particular the UK’s intention to enter discussions on its association to the EU’s Ukraine Support Loan; innovation, with ongoing discussions on UK participation in the European Innovation Council and the Scaleup Europe Fund; and co-operation to tackle irregular migration and fight smugglers’ networks.”

Sir Keir Starmer has pledged not to enter the single market or a customs union to avoid alienating pro-Brexit voters, limiting the economic upside of any deal.

But Wes Streeting, Starmer’s potential successor who resigned from the prime minister’s cabinet last week, has backed rejoining the bloc and many Labour MPs are pressing for closer ties.

Before last year’s summit the UK had pushed for “mutual recognition” of quality standards to ensure British goods could circulate freely, but that was rejected.

UK officials said they were focused on the reset package but exploring future areas of collaboration.

A Cabinet Office spokesperson said: “We have previously confirmed that the next UK-EU summit will be held this summer. A final date will be confirmed in due course. We are negotiating an ambitious package of measures with the EU ahead of the summit, including a food and drink SPS deal and emissions trading deal that, alone, are set to add up to £9bn a year to the UK economy by 2040.”