The road to the next UK-EU summit runs through Switzerland

Sir Keir Starmer says he will always act in the national interest and, at the next UK-EU summit, wants to adopt a ‘more ambitious’ relationship with the EU. Hemmed in by ‘red lines’ – no membership of the customs union nor the single market – Labour’s reset of the UK-EU relationship seems destined to be limited and unambitious.

Sir Keir and his ministers now frequently acknowledge the economic costs of Brexit. However, at least in public, they steadfastly ignore the consequences of their red lines which cause most of the Brexit loss of up to 8% of GDP. They also steer clear of saying how ambitious they want the new relationship with the EU to be.

Without a clear goal for the relationship, we could be offered unconvincing aspirations like: “the new strategic partnership we seek with the EU will be the pursuit of the greatest possible access to the single market” or “we do not seek membership of the single market. Instead, we seek the greatest possible access to it”.  However, repeating the words of Theresa May in her Lancaster House speech nine years ago would be too vague for 2026.

The UK’s weakened relationship with the US, major geopolitical threats and heightened economic uncertainty, mean it is not a time for political timidity. Fortunately, help is at hand from the EU.

The new package of EU-Switzerland agreements (‘Bilaterals III’), signed in March 2026, offers a potential model for the UK of integrating with certain sectors of the single market, while not becoming a full member. This looks like a good fit because Switzerland’s trade pattern with the EU is very similar to the UK’s – the EU accounts for about half of its trade in goods and services, and is, by far, Switzerland’s most important trading partner.

As a result of its new agreements, Switzerland gains improved participation in the single market in electricity, food safety, health, and state aid rules. The EU gains removal of trade barriers, opening Swiss agriculture to EU rules, and connecting Swiss hydropower to the EU network.

A version of the Swiss arrangement tailored to the UK relationship, could be an ideal starting point for Labour to reshape the UK’s relationship with the EU because it would preserve a red line. Indeed, in Brussels last month, Maroš Šefčovič, the EU Trade Commissioner, reminded Nick Thomas-Symonds, UK Minister for EU relations, that a Swiss-style deal is on the table for the UK – if the UK wants it.

Economically, single market membership is much more valuable than customs union membership, so it should be the priority. Partial integration into the vast EU market is so valuable that it is worth paying for, which Switzerland does by contributing to the EU budget. The major trade-off is the need to align domestic rules and regulations to the EU for the chosen sectors. However, as UK businesses already need to comply with EU rules to export to the EU, this is not a major new regulatory burden.

Further, this does not mean the UK would be a passive rule-taker: formal governance arrangements allow the Swiss to give input to the EU to shape regulations for the relevant sectors. Nevertheless, as a non-member, the UK would have no vote and no final say.

The big economic benefit for the UK would come from the removal of post-Brexit red tape which, to give one example, has been so devastating for SME exporters. HMRC statistics show that 39,000 SMEs that used to export solely to the EU in 2018 no longer did in 2024. The Federation for Small Businesses found that the SMEs that had stopped importing or exporting to the EU since 2018 did so because of the volume of paperwork (56%), overall costs (49%) and supply chain or logistical issues (29%).

A key channel to remove trade barriers would be through mutual recognition agreements. These remove duplicate product testing and certification, promote free movement of goods, and make it easier and cheaper for businesses to sell goods across borders. Reduced barriers would also facilitate another top agenda item from last year’s summit – improved UK-EU cooperation on security and defence including the production of military equipment.

Free movement of persons is also a key feature of the internal market, which makes it easier to provide services and for skilled people to move to where they are needed. Switzerland has allowed free movement of persons with the EU for over 20 years. Nevertheless, the package recognises that immigration is a sensitive political issue and includes an emergency brake that the Swiss can apply in the event of serious economic or social damage.

Free movement of persons seems currently to be a political bridge too far for the UK, given the tortuous negotiations on a UK-EU youth mobility scheme and the polling of Reform UK. On the other hand, immigration has plummeted and public opinion is now firmly in favour of rejoining the EU. As a pragmatic objective, the UK could seek some form of labour mobility (in both directions) and visa waivers linked to recognition of professional qualifications or occupations.

The recent Swiss negotiations took around four years. As part of the process the Swiss Federal Council assessed the impacts of all available options including joining the EEA or EU but concluded these were politically unattainable. In the end, the preferred choice was presented politically as a ‘strategic necessity’ because of current global unrest and the importance of maintaining good relations with neighbouring countries.

The Swiss option opens new possibilities for the UK-EU relationship. Although rejoin advocates may see it as a sub-optimal compromise, a UK version offers the government a political route to achieve a much closer relationship with the EU and significant economic benefits. It would certainly be ambitious and in the national interest.

By Richard Barfield.