Director Weekly Into a new era
This week’s agreement marks a turning point in the UK’s post-Brexit relationship with the EU. Closer cooperation in key areas should benefit business.
Agreements with the UK’s trading partners, it seems, are like London buses. We’ve been waiting a long time for one – but now three have turned up in short order.
Following trade and tariff deals with India and the US, this week saw the first ever UK-EU Summit and a ‘reset’ agreement based on what Keir Starmer described as “common sense, practical solutions” to a raft of challenges spanning defence, energy, trade and more.
Many IoD members will welcome this moment. After all, the EU as a whole remains the UK’s largest trading partner, yet the 2020 Brexit agreement created significant barriers to trade including onerous paperwork and border checks.
Since then, improving UK-EU trade has become increasingly important for IoD members. Indeed, it was picked as a top-three priority for growth by 35% of respondents in our January 2025 Policy Voice survey.
So what can we conclude about the reset deal? Here are three key takeaways.
1. This deal is cause for cautious optimism
This week’s agreement will have some concrete, practical benefits for the UK economy. Two central elements – reducing border paperwork and inspections, and closer cooperation on energy – are forecast to boost UK GDP by £8.9bn a year by 2040.
Yet our analysis shows that the agreement will boost GDP by just 0.2%. It doesn’t even come close to the 4% hit to GDP caused by Brexit (as calculated by the Office for Budget Responsibility).
Plus, in many areas, the deal is light on tangible detail. Read the government explainer and you’ll find several sections that comprise little more than an agreement to work towards an agreement.
Yet that in itself is a significant shift, following five years of acrimony and mistrust since the Brexit deal was agreed. This is a good first step – but we now need to see a structured and timely process for further negotiations.
2. The agreement offers little on two declared priority areas
Labour’s manifesto included commitments to seek a veterinary agreement, to help touring artists, and to secure a deal on mutual recognition of professional qualifications.
The first of these priorities is addressed by the new UK-EU Sanitary and Phytosanitary Zone, which will do much to simplify existing rules and reduce border costs.
There is less of substance as on the other two fronts. On qualification recognition, there will merely be “dedicated dialogues”– and for touring artists, “the UK will explore how best to improvement arrangements… with the EU and EU Member States.” Progress looks likely to be slow.
3. Business will look to the trade strategy to drive further improvements in trade rules
The government’s formal trade strategy is yet to be released, but some of its contours are already emerging via these recent deals. The IoD understands that a text of that strategy has now been agreed, with close links to the industrial strategy (which is likely to be published first).
We hope to see the government commit to going much further to improve the trading environment. Additional steps to reduce paperwork and strip out unnecessary costs would be welcome. Delivering the Single Trade Window, which was paused in 2024, could help drive simplification. And far more could be done to encourage small businesses to export.
Many businesses will welcome this week’s reset with the EU. But it is only a start. There is more to be done.

Get updates from Director
There has been an unexpected error.
Thank you for subscribing.
Unsubscribe at any time. Read our privacy policy.