10 years since Brexit – what to expect from UK-EU relations in 2026 

A decade on from the Brexit referendum, after years of recrimination and hard negotiation, the politics around the UK-EU relationship are shifting.  

The UK Labour government is increasingly framing closer cooperation with the EU as in the UK’s economic and strategic interest, softening some of the political red lines around reintegration - including the recent reported proposal for much deeper alignment on goods trade. The issue has also become more prominent in UK domestic politics, both as a dividing line with Reform UK and now as part of the incipient Labour leadership contest. The need for economic growth, threat from Russia and uncertainty about America add urgency.  

The EU remains cautious about any sweeping “reset” (a term the Commission does not use or recognise), as demonstrated by its reported rejection of proposals resembling a single market for goods. This reflects the history of Brexit, and uncertainty about the future direction of UK politics. For Brussels, the UK sits below other priorities, including Russia, the US and China, managing populism and EU “competitiveness”. The Commission is focusing on targeted areas where there are clear mutual benefits without allowing the UK to “cherry-pick”.  

Against this backdrop, this blog takes stock of where the relationship currently stands; the progress made on last year’s UK EU summit commitments; what could realistically emerge from the next summit (still unconfirmed but pencilled in for 13 July); and what businesses and investors should expect in 2026 and beyond. 

Flint Global, in partnership with UK in a Changing Europe and IE University, will be hosting conferences on the future of UK-EU relations in late June in both London and Brussels. Please get in touch or visit our webpage here to know more.  

One year on: where has progress been made? 

The 2025 UK-EU Summit announced specific commitments under the ‘Common Understanding’. The question now is what tangible results will be delivered and what new ground will be broken. 

Negotiations have focused on three principal workstreams: a sanitary and phytosanitary (SPS) agreement, linking the EU and UK emissions trading systems (ETS) and a deal on youth mobility. They do not include any fundamental renegotiation of the free trade agreement underpinning EU-UK relations, the Trade and Cooperation Agreement (TCA).  

While negotiations have progressed in some areas, several workstreams have only recently entered substantive discussions, and significant political and technical obstacles remain, including limited political bandwidth. 

• SPS agreement. The most advanced workstream, showing increasing signs of being agreed in time for this year’s summit. An SPS deal would reduce checks and paperwork on UK-EU agri-food trade, easing friction for exporters. In return, the UK would need to accept ongoing alignment with EU food standards, financial contributions and shared governance arrangements. 

• ETS linkage. Progress has been slower, but negotiations continue. A deal would help avoid additional costs from each side’s Carbon Border Adjustment Mechanisms (CBAMs), particularly for carbon-intensive sectors such as steel, chemicals and energy. As with SPS, closer cooperation would likely require ongoing UK alignment with relevant EU rules and governance mechanisms. 

• Youth mobility. This is the most politically sensitive area. The EU is pushing for a comprehensive youth mobility scheme, tying progress on this issue to the wider “reset” negotiations, as well as for a return to EU students in the UK qualifying for “home” tuition fees, which is a major obstacle. The UK remains cautious about anything perceived as a return to free movement or impacting net migration figures. Discussions are focused on a more limited, time-bound arrangement with caps on participant numbers.  

Wider political and economic tensions are also complicating negotiations. Amid growing pressure on EU finances, the Commission and several Member States are seeking meaningful (some in the UK say unreasonable) UK financial contributions as part of any bespoke post-Brexit arrangements. This  contributed to the collapse of defence talks over UK participation in the Security Action for Europe (SAFE) procurement scheme last year and now includes proposals for a permanent contribution mechanism – which was not agreed at last year’s Summit. 

At the same time, the EU’s broader industrial strategy, including its “Made in Europe” agenda and upcoming sovereignty-focused legislation, is shaping how Brussels approaches negotiations with third countries, giving it additional leverage in discussions with the UK. Member States are not always aligned on how far this approach should go. 

As a result, this year’s summit, if and when it happens, is more likely to endorse progress made so far and set the direction for agreements later in the year, rather than deliver any major new breakthrough – although an SPS announcement is likely. 

What are the next steps in the “reset”?  

The way ahead beyond the summer will be influenced by UK politics. If there is a Labour leadership contest, candidates will have to decide their stance on the EU relationship, with pressure to be more ambitious. The UK government is showing interest in moving beyond sector-specific agreements towards deeper forms of regulatory alignment. Recent suggestions that closer alignment would be in the UK’s “national interest” have fuelled speculation that the government may be willing to pursue arrangements more comparable to Switzerland in selected sectors. 

But the kind of frictionless trade the UK often says it wants is not achievable without accepting some combination of: 

• dynamic alignment with EU rules;  

• new governance and dispute resolution mechanisms (involving a role for the Court of Justice of the EU);  

• financial contributions;  

• reduced domestic regulatory autonomy; 

• greater freedom of movement of services and people. 

The Swiss and Norwegian “pay to play” models illustrate this trade-off. Both enjoy deeper access to the EU market than the UK but accept substantially greater obligations in return. The Starmer administration appears increasingly willing to engage with this reality, and is reported to have explored more ambitious forms of integration, including a single market for goods.  

However, the political pathway towards materially deeper integration in the near term remains narrow. Brussels takes the position that the UK needs to be clearer about its goal and that large-scale institutional negotiations would be premature while the EU and UK are unable to conclude ongoing smaller-scale deals. They are also waiting to see how UK politics evolves. For now, the “reset” is likely to remain incremental rather than transformational, focused on areas where both governments and businesses see clear mutual benefits from closer cooperation.  

What does this mean for businesses and investors? 

For businesses and investors, the key takeaway is that the direction of travel is now towards closer cooperation, but not a fundamental rebuilding of the pre-Brexit relationship. A return to the Customs Union or Single Market remains highly unlikely in the near term. The most realistic outcome is a series of targeted, sector-specific improvements that reduce friction at the margins, particularly in areas where there are clear mutual economic interests, including agri-food, energy, chemicals, pharmaceuticals, automotive and industrial decarbonisation.  

A refreshed UK government may have a relatively short window before the next general election to pursue a more ambitious agenda. However, the obstacles on both sides are daunting. Sustained engagement will therefore be essential. With limited political bandwidth in both London and Brussels, progress is most likely where policymakers hear clear, consistent, targeted and coordinated messages from industry that demonstrates benefits in both the UK and EU.  

This blog was written by Kathryn Watson and Miro Guzzini who work within Flint’s Trade and Markets Access practice, alongside founding partner Sir Simon Fraser. Flint Global has exceptional people in Brussels, London and across Europe and the Asia-Pacific, able to help clients navigate the increasingly complex global trading environment, steer government policy, overcome regulatory and political barriers to trade, enter new markets and achieve their commercial objectives.  

To find out more about how Flint can help you navigate and understand EU and global trade policy, advise on the risks and opportunities of these developments, and support your investments, get in touch.