Prime Minister Andy Burnham on stage in Liverpool for the 2026 Labour Party conference.
Ten years after the Brexit referendum, a question that long seemed politically unthinkable in Britain is officially back on the table: How closely should the country align itself with the European Union in future?
Prime Minister Andy Burnham wants to fundamentally review the relationship and has explicitly named four possibilities — maintaining the current status quo, joining a customs union, returning to the single market or ultimately rejoining the European Union.
No decision has been made.
Economically, however, even an intermediate step would be significant, as the EU remains one of the most important markets for British businesses despite Brexit.
Burnham puts full EU membership back on the table
The new British prime minister spoke unusually openly following his speech at the Labour Party conference in Liverpool.
In his view, Brexit has done Britain “more harm than good”. The country should therefore take a sober look at what kind of relationship with the European Union would best serve its long-term interests.
Burnham outlined a broad range of possible models.
Britain could maintain its current relationship. It could move towards a customs union with the EU, an option advocated among others by former Conservative Chancellor George Osborne.
Another possibility would be a return to the European single market.
And finally, the country could “go the whole way” and rejoin the European Union.
Burnham did not present any of these options as established government policy.
Instead, he announced that the advantages and disadvantages would be examined and that the various options would be presented around the time of the next UK-EU summit in November.
That can reasonably be described as a political shift.
Under Starmer, three of these options were still ruled out
Labour entered government in 2024 with much tighter red lines.
Under Keir Starmer, Britain was to cooperate more closely with Brussels, but a return to the single market, a customs union and the restoration of free movement were all explicitly ruled out.
Rejoining the EU was not under discussion either.
Instead, Starmer began a gradual “reset” of relations.
Britain rejoined the Horizon Europe research programme, negotiated measures to ease food trade and sought closer cooperation in defence, energy and youth mobility.
Burnham, who became prime minister on 20 July 2026, is continuing that rapprochement — but is now also putting the fundamental institutional relationship back up for debate.
Since he took office, the British government has repeatedly spoken of deepening ties with the EU.
Economically, Brexit is far from over
The political debate meets an economic reality in which Britain remains closely connected to the European Union.
In 2025, according to the House of Commons Library, the United Kingdom exported goods and services worth £384 billion to the EU.
That accounted for 41 percent of all British exports.
In the other direction, goods and services worth £472 billion came from the European Union — around half of all UK imports.
Leaving the EU did not end that trade.
But it changed the conditions under which it takes place.
Since the beginning of 2021, Britain has been outside both the single market and the customs union.
The Trade and Cooperation Agreement generally prevents tariffs and quotas on goods that meet the relevant rules of origin.
Companies must nevertheless deal with additional customs formalities, origin documentation, regulatory checks and, for certain products, health and safety inspections.
For smaller exporters or companies with complex supply chains, these non-tariff barriers can be substantial.
Britain’s fiscal watchdog expects a long-term Brexit effect
How large the economic damage from Brexit actually is has been one of the most contentious questions in British economic policy for years.
The independent Office for Budget Responsibility continues to work on the assumption that the current trading relationship with the EU will leave British productivity around four percent lower in the long term than it would have been had the country remained in the Union.
That is not a measurement of a loss that has already occurred with exact precision.
It is a model-based assumption about the long-term development.
The OBR mainly attributes the effect to higher non-tariff barriers that make trade, investment and specialisation more difficult.
Other effects are considerably harder to isolate.
The pandemic, the energy crisis, inflation, interest-rate developments and global trade conflicts have all influenced the British economy at the same time.
Not every weak or strong economic figure can therefore be directly attributed to Brexit.
A customs union would not mean rejoining the EU
The four models named by Burnham would have very different economic consequences.
A customs union would primarily affect trade in goods.
Britain would have to align itself more closely with the EU’s common external tariff.
In return, rules-of-origin checks and parts of the customs bureaucracy could be eliminated.
That could particularly benefit companies whose production chains cross repeatedly between Britain and the EU.
The price would be a loss of trade-policy independence.
Britain would no longer be able to negotiate its own customs agreements with third countries in the same way.
That freedom was one of the central economic arguments made by Brexit supporters.
The single market would go much further
Returning to the European single market would be a substantially bigger step.
The single market is based on the four freedoms of goods, services, capital and people.
It also involves common rules and standards designed to prevent national regulations themselves from becoming barriers to trade.
For the British economy, that would be particularly relevant for services.
Britain is heavily dependent on its service sector.
Financial services, business consulting, technology, the creative industries and other sectors play a major role in exports.
In 2025, the United Kingdom recorded an overall services trade surplus of more than £200 billion.
Closer integration with the single market could reduce regulatory barriers.
At the same time, it would raise the question of how far Britain would be prepared to adopt EU rules and accept the freedoms associated with them.
Such a move would therefore be far more than a technical trade agreement.
Rejoining the EU would be something else entirely
Burnham’s fourth option goes the furthest.
A renewed British membership of the European Union would not simply reverse Brexit.
Legally, London would have to submit a new membership application under Article 49 of the Treaty on European Union.
The Council would have to agree unanimously, the European Parliament would need to give its consent and an accession treaty would have to be ratified by all member states in accordance with their respective constitutional procedures.
The terms of any new membership would also have to be negotiated.
Britain could not automatically return to exactly the same special arrangements it enjoyed before Brexit.
The process would therefore be lengthy both politically and legally.
Burnham’s statement does not mean that Britain is on the verge of rejoining the EU.
It means that the government is no longer excluding the option from the debate altogether.
Business wants less friction above all
For British business groups, the institutional end point is often less important than the practical effects.
Representatives of the British Chambers of Commerce, the Confederation of British Industry and the Federation of Small Businesses reportedly welcomed Burnham’s announcement that he wanted to establish a clearer long-term course towards Europe.
Their focus is primarily on lower trade barriers, reliable rules and less administrative burden.
That is understandable.
Companies do not primarily calculate in political symbols.
They calculate in transport times, paperwork, certifications, regulatory requirements and whether products and services can reach a market without additional costs.
That means agreements falling well short of full EU membership could still have a major economic impact.
The next EU summit will be the first test
Burnham has already held several talks with European heads of government and senior EU officials.
At his meeting with European Commission President Ursula von der Leyen on the sidelines of the UN General Assembly on 22 September, both sides agreed to work towards a successful outcome at the next UK-EU summit.
Negotiations on closer cooperation in food trade, electricity markets, youth programmes as well as defence and technology had already begun under Starmer.
Burnham now appears to want to turn that into a more fundamental debate.
Ten years after the referendum, the political starting point is therefore shifting.
Instead of discussing only how the consequences of Brexit can be mitigated within the existing framework, the British government is once again asking whether that framework itself remains the right long-term solution.
For the economy, that debate may ultimately matter more than the label attached to the final outcome.
Between the current free-trade arrangement and full EU membership lie several levels of economic integration.
Which one Britain chooses will determine how much friction remains between Europe’s second-largest economy and its most important neighbouring market.
SK
