By Fabian Zuleeg, chief Executive and Chief Economist, European Policy Centre
Removing barriers to existing trade and investment is economically important, but politically difficult and slow to pay off. Being included in the new markets governments are creating through defence procurement, industrial investment and economic-security cooperation could deliver benefits much sooner.
Britain needs both, but should not confuse their timescales.
Andy Burnham is right that Brexit has damaged Britain’s economy. But his government should not look primarily to reversing Brexit for immediate economic gains from closer EU relations. The greatest short-term opportunities lie in geopolitics and geoeconomics.
A decade after the referendum, the economic case for closer integration, including eventually rejoining the Single Market or the EU itself, is compelling. But there is a fundamental problem of timing. Even if Britain decided tomorrow to reverse Brexit, the economic benefits would take years to materialise.
Negotiations, implementation and business adjustment would be lengthy. And such a political decision is not on the cards now, as Burnham himself has acknowledged.
Brussels remains cautious about British promises after Brexit. Reintegration would require durable commitments. Amid political turmoil in France, Germany and elsewhere, Britain is hardly Europe’s most pressing concern.
The Burnham government has inherited an incremental reset agenda and is considering how best to move forward. It should continue delivering the agreements already on the table, including on food standards, energy and mobility. But these steps, while necessary, will not fundamentally transform Britain’s economic prospects. Overselling them risks perpetuating the progress illusion: mistaking modest advances for action at the scale, scope and speed the challenges demand.
Yet another route could yield faster gains.
The distinction is between removing barriers to existing economic activity and gaining access to new economic opportunities. Traditional reintegration focuses on reducing the costs of trading with Europe. But increasingly, governments are actively shaping markets through industrial policy, strategic investment, procurement and economic security measures.
The crucial question is no longer simply how easily British companies can sell into Europe, but whether they are included in the decisions and investments that will determine Europe’s future economic landscape.
The dispute over emerging EU Made in Europe policies illustrates the problem. Britain risks exclusion from procurement and industrial initiatives as governments mobilise resources for strategic industries. Seeking exemptions after rules are designed is no substitute for shaping them.
Being inside the tent is increasingly more profitable than being outside.
The world has changed since Brexit.
Trade, investment, technology, raw materials, defence procurement and industrial policy have become instruments of geopolitical power. Coercion and strategic dependencies are reshaping markets.
Liberal democracy also faces mounting threats from authoritarian powers and domestic illiberal movements. Britain and the EU are fundamentally like-minded in defending democracy, European security and the rules-based order.
This opens a different route to integration.
The emerging EU–Canada partnership offers an intriguing model. At their Montreal summit, the two sides are expected to advance an ambitious Alliance for the Future, extending cooperation beyond conventional trade agreements into economic security, defence industries, technology and critical raw materials. Canada’s participation in the EU’s SAFE defence financing instrument already demonstrates how strategic cooperation can create concrete industrial opportunities.
Ursula von der Leyen has suggested Canadian Associate Membership. The label is problematic, especially for sovereignty and EU decision-making. But the idea of an ambitious Integrated or Trusted Partnership among like-minded democracies is sound.
Crucially, such a partnership moves beyond the traditional confines of Michel Barnier’s Brexit staircase, linking greater economic integration to accepting EU rules and obligations.
That logic remains valid for the Single Market. But geopolitical integration offers another dimension: jointly creating capabilities, resilience and influence that partners cannot achieve individually.
For Britain, this could mean deeper defence-industrial integration, joint procurement, coordinated responses to economic coercion, cooperation on strategic technologies and supply chains, and joint financing of investment. It should also encompass strengthening democratic resilience and countering illiberal interference.
The ambition should extend beyond the bilateral relationship. An Economic Security Alliance bringing together the EU, UK, Canada and other like-minded partners, including Japan, South Korea and Norway, could coordinate industrial strategies, strengthen collective resilience and defend shared democratic interests.
This is not Single Market access without obligations. Strategic integration requires trust, mutual commitments and institutions, and would not erase Brexit’s long-term economic costs.
But it could change the economic calculus much sooner. Access to joint procurement, strategic investment and trusted supply chains can generate opportunities in months and years, rather than the much longer timescale of fundamental economic reintegration. And participation from the outset would give Britain influence over decisions that otherwise risk being taken without it.
Burnham should deliver the incremental reset and encourage debate about Britain’s long-term European future.
Neither alone offers a convincing short-term economic strategy.
Britain should not fight yesterday’s Brexit arguments while missing tomorrow’s opportunities.
For now, the strongest argument for closer UK–EU relations is geopolitical. But getting geopolitics right might also be the quickest way to deliver economic benefits.
