Challenge for Starmer to turn warm words with EU into economic wins for UK

Parliament is yet to return, but Sir Keir Starmer has used the last few days of August to frame the next few months of his premiership.

First, there was the bad news – his warning from the Downing Street garden that things are going to get a lot worse before they get better, with “painful” decisions in the shape of tax rises and spending cuts on the way this autumn.

Second, was his attempt to inject some hope into his project and make good on that election message of change – with a visit to Berlin to talk up a “once in a generational chance” to “turn the corner on Brexit”.

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The vehicle for a speech of optimism in the gloom came in the shape of a bilateral treaty between the UK and Germany, who are negotiating to deepen security, defence and trade ties.

It would be the first of its kind between the UK and its biggest trading partner in Europe, and watching the rapport between Chancellor Schloz and the prime minister, it was clear that there was much goodwill and common ground between these two leaders.

As the German premier said at their joint press conference in Berlin: “I am happy about the announcement by Keir Starmer to seek a reset in the relations to the European Union. We want to take this hand which is reached out to us.”

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Both sides want to wrap up the deal by the end of the year, with whispers Sir Keir will be back in the German capital sooner rather than later to sign off on the treaty.

It will be seen and sold as a political win and a reset in Anglo-German relations, undoubtedly strained by Brexit.

The two leaders spoke about a new framework they were working on to better co-ordinate on illegal migration – Sir Keir has long talked about the supply of small boats coming through Germany.

They also spoke of deepening trade and security ties, as well as cultural and societal ones.

There was a nod to collaboration on energy and supply chains – Sir Keir visited a Siemens energy factory after the news conference, while Number 10 said it wanted an “ambitious agreement” to “deepen market access”.

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But there is an obvious elephant in the room. On the one hand, Sir Keir really wants to fulfil his number one mission for government – to become the fastest growing economy in the G7 and take this once-in-a-generation chance to reset relations with European partners.

On the other, this is a prime minister who is insistent there will be no unravelling of Brexit, having ruled out re-entering the European Union, single market or customs union in his lifetime.

It is obvious Germany, France, or any country that is part of the single market, cannot access bilateral trade deals – that is the point of being in the EU trading bloc. So is this just all a lot of warm words and hot air?

Because meaningful improvements in any trade deal will involve concessions. One big ask from Germany – in effect repeated by Chancellor Schloz at the press conferences – is for a youth mobility scheme between the UK and other European countries.

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When I asked Sir Keir about this at the press conference, he explicitly ruled it out, telling me: “We do not have plans for the youth mobility scheme, but we do have plans for a closer relationship between us and the EU.”

He later told reporters he did not rule out setting up some sort of system for other link-ups, for example, student exchanges. Freedom of movement is still a red line, but time-limited exchanges are perhaps not.

This matters because it gets to the meat of what a closer relationship looks like. If the prime minister wants to change warm words into real action, there will need to be concessions, and on Wednesday Chancellor Schloz was clearly laying out one such possible deal.

There are, UK officials tell me, things the two countries can do, such as easing UK access to German markets by, for example, creating beneficial arrangements so regulatory barriers are removed and British companies are able to be part of tender processes.

But this is tinkering at the edges rather than real reform.

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There are plenty back home who will argue that if Sir Keir really wants a reset he should look again at Brexit, because this would be a tangible way of removing trade barriers and going for the economic growth that underpins his entire project. But on this, the prime minister says he will not budge.

By the end of the year, we will have a far better sense of what Sir Keir can achieve with a change of tone, if not substance, in the shape of the first bilateral treaty between Germany and the UK.

But at the moment, it’s hard to see how he turns those warm words into real wins for the UK economy.

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