Starmer’s Brexit reset is economic suicide

The Labour government last week confirmed that it intends to hand British lawmaking power back to the European Union. UK prime minister Keir Starmer said he planned to introduce legislation that will bring the UK into so-called dynamic alignment with the EU laws on energy policy, electricity markets and food standards.

We should be perfectly clear about what this means: the UK will match its laws and regulations to the EU’s, word for word. If the EU changes its laws on an area affected, Britain will then change its own laws to match them. If Brussels says ‘jump’, Britain will reply ‘how high?’. This is the situation that Britain is going to find herself in, thanks to Starmer’s ‘reset’ with the EU.

Despite claims by the government that it is making a ‘sovereign choice’ to copy foreign regulations, the reality could not be further from the truth. Dynamic alignment with the EU turns Britain from a competitive trading partner with the EU to a subordinate satellite market. This is exactly how the EU likes it, and it is indeed what the EU hoped Britain would agree to when then prime minister Theresa May presented her Chequers proposal to Parliament in 2018. Parliament said no in 2018, although it seems less likely that it will say no this year.

Dynamic alignment is offensive for a number of reasons. The government’s attempts to defend it are misguided at best, dishonest at worst.

Let’s start with the economic arguments. Under Starmer’s plan, EU laws will be applied across the entire British economy, including on businesses and consumers which have no trading relationship with the EU. This means that a British farmer selling British beef to British families will have to follow EU rules when doing so. British farms and British supermarkets may be subjected to inspection by EU officials to ensure they are compliant with foreign rules, and British taxpayers will be expected to fund the operations of these officials in this country.

Britain has become a home for innovative businesses experimenting with new genetic technology, thanks to the liberalisation of gene-editing laws post-Brexit. A nascent and dynamic sector of the economy will be snuffed out in the pursuit of closer relations with the EU, which is opposed to evidence-based innovation in this area.

The pursuit of dynamic alignment also misunderstands the nature of the trading relationship between the UK and the EU post-Brexit. When it comes to food, the sector affected by Sanitary and Phytosanitary (SPS) regulations, it is worth remembering that the UK is a net importer of food from the EU and around the world. British food producers overwhelmingly produce for the domestic market, so they will not see any kind of economic opportunity from following foreign laws.

The suggestion that alignment will lead to a boom in British exports to the EU is also laughable. Since Brexit, British sheep and lamb exports to the EU have done incredibly well, growing by 15 per cent in 2025. To suggest that these figures would be significantly higher if there was an SPS agreement, especially as the EU imports plenty of lamb from other non-EU markets like Australia and New Zealand, is economically illiterate. Similarly, beef exports to the EU also reached record highs in both value and volume in 2024. Dairy exports to the EU have also shown strong growth over the last two years – this, in a sector that was often held up as one which suffered the most from Brexit.

Dynamic alignment of food-standards regulations appears to be motivated by a misdiagnosis of the trading relationship between Britain and Europe. But the proposed alignment of carbon pricing is a straightforward attack on British industrial competitiveness. Proposed as a means of ensuring Britain avoids facing an EU carbon tariff, the government has agreed to link carbon prices for energy-intensive industries with the EU’s.

This is an act of catastrophic self-harm. In 2025, the EU’s carbon price was some 50 per cent greater than Britain’s. So the prime minister has decided to increase the operating costs of British industry, at a time when the government should be doing all it can to reduce the crippling price of energy.

It is a double-whammy. Not only does the UK suffer – the EU benefits, too. Labour is effectively allowing Brussels to shield itself against any competitive threat from the UK, even in industries that do not export manufactured goods. Data centres pay carbon taxes, and their running costs will be increased by this policy, even though they do not produce goods which could be affected by an EU tariff.

Labour claims that dynamic alignment is good for the British economy. But, in reality, the only winner will be the EU, which will be able to treat Britain like a captive market for its exports. Considering the EU’s poor economic performance and declining share of the global economy, this is no path to prosperity.

None of this touches on the real problem with Starmer’s plan for closer EU integration – namely, that it is a betrayal of everything the British people have voted for. The UK has effectively had two votes on the EU – the first in 2016, when Leave won the biggest democratic mandate in British history. And again, in 2019, when Boris Johnson’s campaign pledge to ‘get Brexit done’ delivered him a landslide majority. The latest betrayal is made even worse after Starmer’s own promise, before the General Election, that Brexit was ‘safe’ in ‘his hands’. Now here he is, trying to wheedle the UK back under Brussels’ dominion, without parliamentary scrutiny.

The whole thing reeks of desperation. Starmer, having abandoned any kind of domestic policy agenda, is instead choosing to take Britain back into the EU, step by step. Its implications are already clear: a weaker economy and a steady erosion of parliamentary sovereignty. The EU reset is a road to nowhere – we must chart a new course as soon as we can.

Fred de Fossard is the director of strategy at the Prosperity Institute.