The UK and EU are considering 2025 as a reset year, but there is little room for concessions

EU figures say they are baffled by the UK government’s announcement of an “ambitious” reset while insisting on maintaining restrictive red lines after Brexit.

A recently published working paper outlining EU interests said there were “limited economic gains on offer” from the UK’s refusal to rejoin the EU’s customs union or single market or accept the free movement of people.

Some in the EU suspect that the UK government believes it can win pro quo for defense trade. They say it will never happen.

“The UK is wrong if it thinks it can use the defense deal as a back door to get sweet deals with us on trade,” an EU diplomat told me.

“For us, it’s like being in a strange tussle. The EU has a devil on one shoulder and an angel on the other. In terms of values, there’s more that unites us than separates us from the UK.

“The EU wants to take action to bring the UK closer, but on the other hand we cannot remove the technicalities that underpin the EU. We cannot do special deals with the UK, even if it limits the relationship.”

Both sides will have to make compromises to see significant improvement in economic relations.

Brussels has no appetite to undermine the TCA – the existing trade agreement between the EU and the UK. But at the same time, you find the openness of the EU to start negotiations on different economic sectors.

One EU diplomat insisted: “We can walk and chew gum at the same time.”

There is also recognition on the UK side that sectoral agreements may include alignment with EU rules in these sectors.