Recently, a term that had been deliberately set aside after Brexit has resurfaced in British politics: customs union. Health Secretary Wes Streeting publicly stated that the UK should no longer consider rejoining the EU customs union as a taboo. This remark is particularly striking as it exposes a harsh reality: under the Labour Party’s current three red lines, the institutional friction between the UK and the EU cannot be genuinely repaired.
This is not the first time senior Labour figures have signaled a similar message. Deputy Prime Minister and Justice Secretary David Lammy has indicated that establishing closer economic ties with the EU is a pragmatic choice. He specifically mentioned Turkey as an example: although Turkey is not an EU member, it is within the customs union and ‘seems to be benefiting from it, with its economy continuing to grow.’ The implication here is quite clear.
Many still question: Did not the UK sign a free trade agreement with the EU? The issue lies precisely here: free trade agreements address ‘whether there are tariffs’ but do not resolve ‘how to cross borders.’ Rules of origin, repeated customs declarations, compliance documents, and border checks create a set of invisible yet costly non-tariff barriers. For industries reliant on just-in-time logistics, such as automotive, chemicals, food, and pharmaceuticals, these frictions are the key factors that slow down investment and compel companies to rethink their operations.
The substantial benefit of a customs union lies in the removal of these institutional frictions all at once. Member states do not need to provide proof of origin, goods do not require repeated customs declarations, and borders become almost a formality. This is not an abstract system but rather a reflection of time and costs manifested daily at Dover, in warehouses, and on supply chain ledgers. The simpler the system, the higher the competitiveness.
Of course, rejoining the customs union is not without its costs: the UK would lose its independent tariff policy space and may have to restart trade negotiations with countries like Australia, New Zealand, the United States, and India with which it has already signed trade agreements. However, in terms of scale, proximity, and industrial structure, the EU remains the UK’s largest, closest, and most complementary trading partner, far outweighing any single country. Most trade agreements the UK has signed in recent years have limited economic benefits and cannot offset the long-term losses caused by the decline in trade with the EU. The costs of institutional friction accumulate daily in reality.
Labour officials are not the first to propose this route. The Liberal Democrats have long advocated that the UK should rejoin the EU customs union, while the Green Party has gone further, openly calling for rejoining the EU. These past proposals were seen as fringe voices, but they are gradually moving towards the mainstream for a simple reason: politicians are finally catching up with public opinion.
The resurgence of the customs union is not a nostalgic political move but an attempt at institutional repair. It may not be the endpoint, but it is likely the only halfway house that can materially improve the functioning of the UK economy without restarting a referendum or fully returning to the single market. Whether the UK is willing to acknowledge this is the real question worth observing.
