Britain should negotiate a new customs union agreement with the European Union, says Liberal Democrat leader Ed Davey.
In a speech on Thursday, he will argue that it is needed to strengthen Britain’s economy and its ability to deal with the incoming Donald Trump presidency from a position of strength.
A Lib Dem source told the BBC the policy was not a step towards rejoining the EU, but a pragmatic move to “turbocharge” the economy.
Countries in a customs union agree not to impose fees – so-called duties – or customs controls on each other’s goods, but according to EU rules they cannot make their own trade agreements either.
Prime Minister Sir Keir Starmer has called for a restoration of relations with Brusselsbut has ruled out joining the customs union or the EU’s single market – which guarantees the free movement of goods, capital, services and people within it.
A government spokesman said Britain wanted to “tackle barriers to help drive investment and growth”, but added: “We will not reopen the divisions of the past and there will be no return to the customs union, the internal the market or the freedom movement.”
Sir Ed’s speech is his first to focus on relations with Brussels since becoming Liberal Democrat leader after the 2019 general election, when the party’s campaign to stop Brexit saw it reduced to just 11 MPs.
In last year’s general election, the party won a record 72 seats on the back of a campaign which barely mentioned the EU at allalthough rejoining the bloc remains the party’s long-term goal.
Sir Ed’s call to join the EU’s customs union is not ideological, party sources say, but about putting Britain in the best possible position to deal with the new Trump administration and the EU.
Trump has threatened to impose tariffs on US imports after he returns to the White House next week, sparking concern in many export-dependent countries.
Sir Ed will attack the Government for rejecting a new customs union with the EU, saying it would be the best way to tear down trade barriers and “turbocharge our economy in the medium to long term”.
He will urge ministers to negotiate a deal with the EU this year, with the aim of forming a new customs union by 2030, arguing this will allow the UK to “deal with President Trump from a position of strength, not weakness”.
In his speech, the Lib Dem leader will argue that Britain needs to be much more ambitious and to act with much more urgency, “not just tinkering around the edges of the messed up deal the Conservatives signed four years ago”.
There are no tariffs or other trade barriers between countries in the EU customs union – which the UK left in January 2021 when Brexit came into effect.
But the member states impose common tariffs on all goods entering the Union from outside.
Sir Ed is also expected to accuse Conservative leader Kemi Badenoch of wanting to go “cap in hand” to President-elect Trump and “beg for whatever trade deal he gives us”.
He is expected to describe Reform UK leader Nigel Farage as “cooing over Trump and licking his boots” and is “more interested in advancing Trump’s agenda over here than Britain’s interests over there”.
“If we appear as weak or as desperate as the Conservatives or the Reformers want us to appear, Trump will treat Britain the same way he has treated so many throughout his career,” Sir Ed will argue.
Britain’s trading relationships with its European neighbours, or other partners such as Canada and India, could be strengthened “so much faster”, he will say.
The Conservative Party and Reform UK have been contacted for their response to Sir Ed’s comments.
In a speech she will give on Thursday aimed at rebuilding confidence in the Conservatives, Badenoch will admit her party made mistakes when in power – including in Europe.
“We announced we were leaving the EU before we had a plan for growth outside the EU,” she is expected to say.
Over the past week, the value of the pound has fallen sharply and the cost of UK government borrowing has risen to decade-high levels.
But ministers were offered some respite on Wednesday then Interest rates on government bonds, also known as gilts, eased after official figures showed an unexpected fall in the rate of inflation
