Key Takeaways:
- The EU is demanding significant financial compensation from the UK if it quits a post-Brexit "reset" deal, including a "Farage clause" to deter Nigel Farage from reversing the agreement.
- The clause would require the UK to pay compensation for setting up border controls and infrastructure if it pulls out of the deal.
- The EU wants a long-term agreement that would endure past the current UK parliamentary term, which ends in 2029.
- A veterinary agreement is a crucial element of Sir Keir Starmer’s plans to improve trading arrangements with Brussels, and could boost UK food and drink exports by 22%.
- The EU is increasingly aware of the risk of its planned deals with Starmer unravelling due to Reform UK’s lead in the polls.
Introduction to the EU’s Demands
The European Union is taking a firm stance in its negotiations with the UK, demanding significant financial compensation if the UK were to quit a post-Brexit "reset" deal. This demand is part of a larger effort to establish a veterinary agreement, which would remove Brexit red tape for British food and drink exporters. The EU has included a termination clause, dubbed the "Farage clause," which would require the UK to pay a high level of restitution if it chose to exit the proposed agreement. This clause is seen as a safety provision to provide stability and a deterrent for Nigel Farage, the leader of Reform UK, who has threatened to reverse any deal made by Sir Keir Starmer’s government.
The "Farage Clause" and Its Implications
The "Farage clause" states that if either side pulls out of the agreement, it must pay compensation that would include the costs of setting up "the infrastructure and equipment, initial recruitment and training, in order to set up the necessary border controls." This clause is seen as a way to insure the EU against the risk of Farage becoming prime minister and making good on his threat to reverse Starmer’s attempted move closer to Brussels. The EU diplomat who spoke to the FT about the clause emphasized that it was a "safety provision to provide stability and a deterrent for Farage and Co," and that Brussels was looking to sign a deal that would endure past the current UK parliamentary term, which ends in 2029.
The Veterinary Agreement and Its Benefits
A veterinary agreement is a crucial element of Sir Keir Starmer’s plans to improve trading arrangements with Brussels. Such an agreement would remove almost all Brexit red tape faced by exporters of agrifood products, and could boost UK food and drink exports by 22%, according to a 2024 study. Trade and industry groups have strongly advocated for such a deal, and Starmer has made it a key part of his plans to improve relations with the EU. The agreement would also require the UK to "dynamically align [with] and simultaneously apply" any rules governing animal and plant products that are introduced by EU lawmakers in Brussels.
Reform UK’s Opposition to the Deal
However, not everyone is in favor of the deal. Reform UK has promised to reverse the SPS deal that Starmer is negotiating with the EU if they win power. Nigel Farage, the leader of Reform UK, has accused Starmer of "doing his best to give away our parliamentary sovereignty, to give away our rights as voters." The Conservative leader, Kemi Badenoch, has also promised to reverse Starmer’s "terrible deal," saying she could not accept any agreement with Brussels that involved Britain being subject to rulings by the European Court of Justice.
The EU’s Commitment to the Deal
Despite the opposition from Reform UK and the Conservatives, the European Commission remains committed to the implementation of the actions agreed with the UK at the Summit in May 2025. UK government officials have said that it is standard for agreements to have contingencies for termination and that they would apply equally to both parties. A senior Labour official noted that it was ironic that both Reform and the Conservatives, which style themselves as parties of free markets, were promising to restore trade barriers if they won the next election. The official added that Nigel Farage would be going into the next election saying he wants to bring back red tape, mountains of paperwork, and a greater bureaucratic burden.
Conclusion and Future Implications
In conclusion, the EU’s demands for significant financial compensation if the UK quits a post-Brexit "reset" deal are a significant development in the ongoing negotiations between the two parties. The "Farage clause" is a clear attempt to deter Nigel Farage and Reform UK from reversing any deal made by Sir Keir Starmer’s government. The veterinary agreement, which is a crucial element of Starmer’s plans, could have significant benefits for UK food and drink exporters. However, the opposition from Reform UK and the Conservatives highlights the challenges that any deal will face in the future. As the UK and EU continue to negotiate, it remains to be seen whether a deal can be reached that satisfies all parties involved.