Podcast Summary – The Rest Is Money

Episode 173: Why Starmer Didn’t Do Enough On EU Trade
Hosts: Robert Peston & Steph McGovern
Date: May 20, 2025

Main Theme

This episode unpacks the recently announced UK-EU trade deal, focusing on Keir Starmer’s government and its approach to restoring smoother trade—particularly in food and agriculture—while weighing the political, economic, and symbolic implications. Robert Peston and Steph McGovern provide behind-the-scenes insights, break down the impact on British business, and debate whether the government has gone far enough, connecting today’s events to the fraught history of UK-EU relations.

Key Discussion Points & Insights

1. Atmosphere & Context of the Deal

• Lancaster House Setting: Robert describes the positive atmosphere among EU and UK negotiators. Since Starmer’s election, relations have "massively warmed up."
  • "There was lots of sort of smiles and hugs. There's no question that...the mood of EU-UK relations has massively warmed up since Keir Starmer became Prime Minister." (02:53, Robert Peston)

2. Headline Points of the Deal

• Fishing:

  • EU boats retain access to UK waters for 12 years—a symbolic issue given fishing’s historical and emotional resonance despite its small economic footprint (about 0.04% of GDP).
  • "Fishing seems to be the thing that's such an emotive and territorial topic, and yet it contributes such a tiny amount to our GDP...about a billion pounds a year." (03:50, Steph McGovern)
  • Government allocates £400 million to help affected coastal communities but faces criticism from Brexit-supporting parties for not doing enough.

• Food & Agriculture (Dynamic Alignment & SPS Checks):

  • The UK agrees to ‘dynamic alignment’ with EU food standards, effectively rejoining the EU’s single market for food/agriculture.
  • This move eliminates border checks on food exports to the EU, significantly reducing bureaucracy—labelled as a "big win" for producers.
  • "Part of the deal is around food standards. The government is agreeing to rejoin the EU single market when it comes to our farmers and our food producers..." (07:05, Robert Peston)
  • The government estimates this will add £9 billion to GDP by 2040 (an 0.2% increase), which, as Robert explains, is helpful but not transformative.

3. Political Calculus & Missed Opportunities

• Dynamic Alignment & Sovereignty Debate:

  • Brexiteer critics see the commitment to EU standards as a loss of sovereignty; they’re especially opposed to the European Court of Justice’s oversight.
  • "It's a sort of ideological obsession, rather than just a practical question of what is good for British farmers and food producers." (11:45, Robert Peston)

• History Repeating: The Missed May/Corbyn Alliance:

  • Robert argues that if Starmer had gone further—echoing Theresa May’s "Chequers deal" which Labour torpedoed in 2018—the UK could have regained half the Brexit-induced GDP loss instead of just a fraction.
  • "What Keir Starmer has agreed today adds 0.2% to our GDP...Theresa May's deal would have actually restored half of that loss, 2%. So ten times what Starmer got today. And that's meaningful." (15:00, Robert Peston)
  • He suggests Starmer missed a bolder path by not pushing for alignment in all goods, not just food, arguing political timidity and manifesto pledges—rather than practical reasoning—held him back.

4. Northern Ireland & Trade Frictions

• Reducing checks on goods crossing from Great Britain to Northern Ireland is touted as a major benefit, restoring easier business links.
• Steph shares an anecdote about food businesses unable to serve NI customers due to red tape:
  • "It was just making people feel even less part of the UK in terms of doing business with the area." (10:20, Steph McGovern)

5. Youth Mobility/EU ‘Experience’ Scheme

• New allowance for 18–30-year-olds to travel/work more freely between UK/EU for a limited time with capped numbers—branded an "EU Experience Scheme" to avoid accusations of restoring free movement.
• Both see this as positive for business and young people, but Steph notes it may fuel anti-immigration sentiment:
  • "It's not going to go down well on the whole immigration point...they're bound to be skeptical that this is going to be well managed." (20:15, Steph McGovern)
  • Robert: "They should just blooming well get on and do it, because...we are doing genuine harm to our young people..." (20:38)

6. Energy Market Integration & Emissions Trading

• UK and EU plan closer integration on energy markets, which currently operate separately post-Brexit.
• Key goal: merge emissions trading systems (ETS) to set a common carbon price, likely raising UK permit prices, thus increasing Treasury revenue (£1-2bn/year).
• This would exempt UK exporters from the EU’s new Carbon Border Adjustment Mechanism (CBAM), potentially saving them £800m annually.
  • "If we merge our emissions trading schemes...our exporters to the EU will save something like £800 million..." (25:50, Robert Peston)
• Robert recommends using those extra revenues to offset UK energy bills, especially for high-usage industries.

Memorable Quotes & Moments

• On the politics of Brexit deals:

  • "He should have just gone the whole hog and done dynamic alignment for all our physical trade. Because if he's going to be killed for doing food, why not actually make the UK richer by doing it for all of our physical exports?" (16:30, Robert Peston)

• On “sovereignty” debates:

  • "They find it particularly hateful that when it comes to adjudication...the European Court of Justice has a role...it's as bad as William the Conqueror in 1066. For them...it's a sort of ideological obsession." (11:45, Robert Peston)

• On the real-world impact for citizens:

  • "For every thousand pounds of income generated in the UK there'll be an extra twenty pounds. Right. So it's non trivial. But...not transformative." (07:45, Robert Peston)

• On youth mobility scheme:

  • "It's plainly the case that we are doing genuine harm to our young people, that we're making it harder for them to gain these experiences of other parts of the world." (20:50, Robert Peston)

Key Timestamps

• 02:53 – The “lovey-dovey” vibe at Lancaster House, improved EU-UK relations since Starmer.
• 03:50 – Fishing deal explained; symbolism vs economic reality.
• 05:03 – Economic struggles of fishing communities and government support.
• 06:58 – What ‘agri-products’ and SPS/dynamic alignment mean for UK food exports.
• 07:45 – Projected economic gains (£9bn GDP, 0.2%) and limitations.
• 09:02 – Impact on Northern Ireland trade.
• 10:44 – Political consequences: dynamic alignment, sovereignty, ECJ role.
• 14:50 – The parallel to Theresa May’s Chequers deal and what Starmer “could have had.”
• 19:31 – Youth mobility/‘EU Experience’ scheme.
• 21:52 – Energy market integration and merged emissions trading.
• 25:50 – Implications for UK exporters and Treasury.

Tone & Style

The hosts balance analytical rigour and clear explanations with personal anecdotes and candid political critique. Robert is opinionated and detailed, frequently diving into economic analysis and historic context; Steph brings relatable stories and ensures complex ideas are translated into everyday impact. Their exchanges remain engaging, occasionally humorous, and deeply insightful for anyone interested in the intersections of policy and business.

Conclusion

The episode provides a comprehensive and critical analysis of the new UK-EU trade framework. The hosts commend steps taken on food/agriculture and youth mobility but argue that the government missed an opportunity for a far greater economic boost—largely due to political constraints and lingering Brexit taboos. Listeners come away with a nuanced, insider view of how economic policy is shaped, the price of political caution, and the continuing complexities of Brexit’s legacy.