Finance
Factbox-What's in the UK-EU reset deal?
Published by Global Banking & Finance Review®
Posted on May 16, 2025
4 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on May 16, 2025
4 min readLast updated: January 23, 2026
The UK-EU reset deal aims to improve relations with agreements on trade, security, and mobility. Key areas include defence pacts and carbon market linkage.
(Reuters) -British Prime Minister Keir Starmer welcomed European Union leaders to London on Monday to help reset relations with the bloc, with both sides aiming to secure progress in specific areas from trade and migration to security and defence.
Below is a list of issues on the agenda.
DEFENCE AND SECURITY PACT
Britain's Labour government and the EU are set to clinch a defence and security pact that previous Conservative governments opted not to seek when Brexit was first negotiated.
Both sides agree it is imperative for Europe to work more closely together on defence, given Russia's invasion of Ukraine and calls by U.S. President Donald Trump for NATO's European members to shoulder more of the burden of the alliance.
As part of the reset, Britain will consider taking part in EU civilian and military crisis management and be able to participate in joint procurement with the bloc, according to a copy of the pact seen by Reuters.
However, British companies' access to a 150 billion euro ($167 billion) programme to rearm Europe is subject to further talks.
SANITARY AND PHYTOSANITARY
Labour has positioned a veterinary agreement with the EU that is aimed at preventing unnecessary border checks as central to its planned EU reset.
Any deal would maintain high food standards, which Britain also insisted were not lowered in its discussions with the U.S. to remove tariffs.
Britain and the EU will work towards setting up common food and plant safety standards to reduce most of the existing red tape and smooth the flow of trade, according to a draft "common understanding" document seen by Reuters.
MOBILITY
A youth mobility scheme to make it easier for under-30s to travel and work between Britain and the EU is a priority for the bloc.
Starmer's government has said this will not be a return to freedom of movement, but to a controlled amount of people, with a likely limit on how many can use it and how long they can stay. Campaign group Best for Britain said two-thirds of Britons support a scheme with a two-year limit.
The draft understanding document showed that the two sides will work towards a youth mobility deal, although the number of participants in any scheme will be subject to further discussion.
FISHERIES
Britain and the EU are set to extend full reciprocal access to waters to fish until June 30, 2038, extending by 12 years provisions that were due to expire in 2026.
The post-Brexit trade agreement transferred existing quotas to the bloc for a transition period, after which they would be negotiated on an annual or multi-annual basis.
Fishing has long been a source of tension. The EU has taken Britain to court over its ban of fishing for sand eels in UK waters.
ELECTRICITY
Britain left the EU's internal energy market after Brexit, but the UK's energy industry is pushing for more efficient and closer electricity trading arrangements with the bloc.
The two sides will now explore Britain's participation in the EU's internal electricity market.
Britain imported around 14% of its electricity in 2024, a record high, through power links with Belgium, Denmark, France and Norway.
CARBON MARKETS
Many EU and British businesses have called for the EU and UK carbon markets to be linked. They already collaborate on charging power plants and other industrial entities for their carbon emissions to reach climate targets.
Britain and the EU will now work towards establishing a link between their emission trading systems.
Industry analysts have said linking the two carbon markets would probably drive up UK prices, which are lower than the EU, to EU levels.
But energy firms say it will save costs for consumers, improve market liquidity, and help Britain to avoid penalties under Europe's Carbon Border Adjustment Mechanism, which from 2026 will impose fees on EU imports of steel, cement, aluminium, fertilisers, electricity and hydrogen.
OTHER AREAS
The mutual recognition of certain professional qualifications, changes to ease travel for touring artists, and data-sharing are all areas where Britain and the EU may seek to pursue future agreement.
($1 = 0.8933 euros)
(Compiled by Alistair Smout, Kate Holton, Philip Blenkinsop, Andrew Gray, Sachin Ravikumar and Susanna Twidale; Editing by Rachna Uppal, Barbara Lewis and Kate Mayberry)
The article discusses the UK-EU reset deal focusing on trade, security, and other key areas.
Key areas include defence and security, trade, youth mobility, fisheries, and carbon markets.
The deal aims to improve cooperation in various sectors, enhancing overall UK-EU relations.
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