Davey calls for UK to join EU customs union to ‘turbocharge’ economy

Sir Ed Davey will call for the UK to seek to rejoin the EU customs union to help protect the economy amid concerns about potential trade tariffs under Donald Trump’s incoming US administration.

In his first major speech of the year, the Liberal Democrat leader will urge the Labour Government to negotiate a new agreement with Brussels which has at its heart a system for goods to move freely between Britain and the bloc.

Prime Minister Sir Keir Starmer has committed to strengthen ties with the EU and said he wants a “better deal” for Britain post-Brexit, but has repeatedly ruled out rejoining the single market or customs union.

Experts have warned that securing fewer trade barriers will be challenging in any event without the UK Government being prepared to offer its own concessions.

But Sir Ed will argue that negotiating a new “UK-EU customs union” is “the single biggest thing we can do to turbocharge our economy in the medium and long term”.

He is expected to say: “The UK must be far more positive, far more ambitious, and act with far more urgency.

“That is why, today, I am calling on the Government to negotiate a brand-new deal with the EU this year.

“Not just tinkering around the edges of the botched deal the Conservatives signed four years ago, but negotiating a much better deal for Britain, that has at its heart a new UK-EU customs union, to come into force by 2030 at the latest.”

The Lib Dem leader will add: “It would be a win-win for our country, and I still can’t understand why the Government continues to rule it out.”

Sir Ed will call on ministers to negotiate a new deal with the EU this year, with the goal of forming a customs union no later than 2030 in order to help the UK “deal with President Trump from a position of strength, not weakness”.

He will then accuse Conservative leader Kemi Badenoch of wanting to go “cap in hand” to the US president-elect and “beg for whatever trade deal he’ll give us”, and Reform UK leader Nigel Farage of “licking his boots” and being “more interested in advancing Trump’s agenda” than in the UK’s interests.

It comes after mounting concerns over the UK’s economic outlook in recent days as Government borrowing costs rose to decades-high levels and the value of the pound dropped sharply.

Ministers were offered some respite as markets appeared to have calmed on Wednesday, with the pound rebounding as traders welcomed lower-than-expected inflation data for December, back to 2.5% from 2.6% in November.

But Sir Ed will insist that deepening ties with EU was key to “protect our economy” during the second Trump presidency.

He is expected to say: “How do we deal with Trump from strength? The answer is to show we are not so reliant on the United States.

“That the UK has alternatives, and won’t be bullied into taking whatever Trump offers us.

“We can rebuild our crucial relationship with Europe so much faster.

“That is how we can protect our economy, defend European security, and deal with President Trump from a position of strength, not weakness.”

The Government rejected the call to rejoin the customs union, saying it would not “re-open the divisions of the past.”

A Government spokesperson said: “We are resetting the relationship with our European friends to tackle barriers to help drive investment and growth.

“This Government was clear in the manifesto, that we will not re-open the divisions of the past and there will be no return to the customs union, the single market or freedom of movement.”

The Conservative Party and Reform UK have been contacted for comment.