Britain’s Prime Minister Keir Starmer and European Commission president Ursula Von der Leyen at the European Political Community summit, in Tirana on May 16, 2025.
Leon Neal | Afp | Getty Images
The U.K. and European Union finally agreed to reset relations Monday, sources told CNBC, after Britain’s acrimonious exit from the European bloc in 2020.
U.K. Prime Minister Keir Starmer is hosting European Commission President Ursula von der Leyen and other senior officials in London for a much-anticipated summit which is taking place against a backdrop of unpredictable global dynamics — led by the U.S.
Three EU officials told CNBC’s Silvia Amaro Monday that the global powers had reached a deal. One stated that reciprocal access to fishing waters had been agreed upon until June 30, 2038, with a deal also made on energy cooperation and the conclusion of the security and defense partnership.
Both sides have also reportedly agreed to work toward a deal that would make it easier for young people to live and work across the continent, according to a document seen by Reuters.
The so-called “balanced youth experience” scheme will allow young people from the U.K. and EU to work, study, volunteer, or travel in each other’s countries for a limited period of time, the document reportedly says.
The U.K. and EU will also look at the potential use of e-gates by U.K. passport holders in European airports “where appropriate,” — a welcome move by many Brits who have had to queue, often in long lines, to get through EU airports since Brexit.
It comes after talks between both sides intensified in the run-up to the gathering at Lancaster House in central London, with last-minute haggling over emotive issues, including the potential youth mobility scheme and fishing rights.
Discussions between the U.K. and EU’s teams went on past midnight, Sky News reported, with one person describing Sunday as a “crazy” day of ups and downs. A press conference will be held at 12:30 pm London time Monday.
Mujtaba Rahman, managing director of Europe at Eurasia Group said ahead of the summit that the deal was likely to pave the way for the U.K.’s participation in EU security and defense policy, including defense industrial policy.
He also said it was likely to include an agreement “to remove friction on trade in agrifoods … and a role for the European Court of Justice in resolving disputes — progress on a youth mobility scheme and more cooperation on energy policy and carbon border taxes are likely as well.”
The Trump administration’s recent shift toward U.S. isolationism when it comes to global affairs, and particularly those more acutely affecting Europe, such as the war in Ukraine, make the case for an ambitious reset, Rahman noted.
But the U.K. will also be wary of an increase in support for Reform UK, the party belonging to Brexit architect, Nigel Farage.
Starmer’s popularity has fallen to its lowest level on record, with just 23% of Brits polled having a favorable view of the prime minister, according to YouGov research released last week, while positivity toward Farage and Reform UK has risen.
A deal between the U.K. and EU was “there for the taking,” Christopher Granville, managing director of Global Political Research at TS Lombard, said in emailed comments, but the big question is whether the U.K. government “will balk for fear of ‘Reform UK’.”
“This will be a revealing test of the political calibre of the Labour government close to one year after its huge election win.”
Sticking points
British leader Starmer has repeatedly said there will be no return to the EU’s customs union, single market, or freedom of movement in any deal that he strikes with the bloc, but critics are keeping a close eye on the degree to which he sticks to that position.
Two of the biggest stumbling blocks in talks leading up to this UK-EU summit were access that EU boats have to fish in U.K. waters — with a post-Brexit deal on fishing rights set to expire in 2026 and France and Denmark pushing for those rights to be extended — as well as a youth mobility scheme that could enable people aged between 18 and 30 to travel and work freely between the U.K. and EU for a limited amount of time.
The UK and EU have agreed to keep talking when it comes to a potential youth mobility scheme rather than make concrete agreements, Sky News reported.
The problem for the Labour government is how to agree on thorny issues like these, without looking like it’s returning to a pre-Brexit partnership.
“Keir Starmer is really in a difficult position here,” Gesine Weber, fellow at the German Marshall Fund, told CNBC Monday.
“He will not want to appear too pro-European and go back to rejoining the EU, that is absolutely not on the table here. He has to balance domestic politics and to strike the balance between getting closer and seeing where cooperation can be approved, but also reaffirming some things that the U.K. had clearly wanted to achieve through Brexit.”
While it’s easier for both sides to agree on security and defense given the shared threat of Russia and the ongoing war in Ukraine, Weber said, other policy areas that have always been complicated were likely to remain so.
“These are areas like fisheries, market access and economic questions, but also of youth mobility and freedom of movement,” she told CNBC’s “Early Europe Edition.”
Analysts at risk consultancy Teneo were skeptical that any agreement would include far-reaching improvements in the trade relationship.
“The summit declaration will likely consist of three parts: one will be symbolic, one will be underwhelming in substance, and one will serve as a stepping stone for more tangible talks about greater cooperation,” Teneo’s geopolitical research team noted ahead of the summit.
The underwhelming part will be a broad array of announcements on trade, Teneo said, noting that while there might be some agreements to cut red tape for U.K. exporters, major improvements are unlikely without U.K. membership in the single market — a bridge too far for the government.
