Lib Dems to force vote in Parliament on new customs union with EU

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The Liberal Democrats are preparing to push a vote in Parliament on forging a new customs union with the EU, in a bid to put pressure on the Labour government to drop its red lines on Europe to boost growth instead of hiking taxes at the Budget.

The Ten Minute Rule Bill, tabled by Liberal Democrat Europe Spokesperson Al Pinkerton, will propose that the UK launch negotiations over a new customs union with the EU. The bill is set to be voted on on the 9th December, just two weeks after the Budget.

The Liberal Democrats are writing to all Labour MPs calling on them to back the bill to boost growth and generate extra revenue for the exchequer, avoiding the need for painful tax hikes. The letter highlights recent analysis from the National Bureau of Economic Research which found that Brexit has reduced UK GDP by 6-8%.

Separate analysis by the House of Commons Library commissioned by the Liberal Democrats has found that the boost to growth from a more ambitious trade deal with the EU could generate at least £25bn a year for the public finances.

The Liberal Democrat plans call for the UK to negotiate a new customs union with the EU, covering most goods but not agriculture, and in which the UK would be consulted during negotiations on new EU trade deals with third countries.

In the letter to Labour MPs, Liberal Democrat Europe Spokesperson Al Pinkerton says:

“As we approach a Budget that will include significant tax rises, we must focus our minds on how to escape the ‘doom loop’ of stagnant growth and falling productivity. A far more ambitious trade deal with Europe — including a bespoke UK–EU Customs Union — would be the single most effective measure ministers could take to boost growth, jobs and living standards.”

Liberal Democrat Leader Ed Davey said:

“The Chancellor has admitted the damage Brexit has done to our economy, including burying British businesses in mountains of red tape, yet the government is refusing to take the steps needed to fix it.

“A customs union with the EU is the single biggest lever this government could pull to turbocharge the UK economy.

“We will work with MPs across Parliament who want a closer trading relationship with Europe — to cut red tape, boost growth, and properly fund our public services.”

ENDS

Notes to Editors

Full letter being sent to Labour MPs below.

Dear colleagues,

I am writing ahead of presenting my Ten Minute Rule Bill to the House on 9th December.

If passed, this Bill would require the Government to begin negotiations with the European Union for a new, bespoke UK–EU Customs Union. I would like to ask you to join me — and my Liberal Democrat colleagues — in supporting it.

In recent months, I have been encouraged by the Prime Minister’s willingness to re-engage with the EU in a substantive way — not least at May’s Reset Summit — and by the Chancellor’s increasing candour about the damage done to UK businesses by the Conservatives’ botched Brexit deal.

This marks a clear contrast with Conservative and Reform MPs, whose indifference to repairing our relationship with our largest trading partner persists despite overwhelming economic evidence and strong calls from British industry. The message from businesses and economists is unambiguous: a better trading relationship with Europe is essential to unlocking the growth our country needs.

Warm words from No.10 and No.11 are welcome, but they must now be matched by concrete action. This is the moment to think ambitiously about the benefits a stronger economic relationship with Europe could deliver for UK businesses.

Since the Conservatives’ shambolic deal, UK firms have been buried under bureaucracy and barriers to growth. The scale of this is remarkable: two billion extra pieces of paperwork since Brexit — a staggering and unnecessary drag on UK PLC.

Our SMEs have borne the brunt of this. The evidence is stark:

• In 2022, LSE analysis showed that the Brexit deal reduced goods exports by £27bn (6.4%) in 2022 - and that smaller firms were most affected.
• In 2023, the OBR estimated that the Conservatives’ Brexit deal with Europe will harm economic growth, reducing long-term GDP by 4%.
• In 2025, the Financial Times reported that trade’s contribution to UK GDP has “stagnated” since Brexit, drawing on the WTO’s analysis.
• In 2025, the National Bureau of Economic Research found that Brexit had reduced UK GDP by 6-8%, cut investment by 12-18%, and lowered both employment and productivity by 3-4%.

It is past time we took the steps necessary to free our businesses from the bureaucratic shackles created by the last Government’s deal.

As we approach a Budget that will include significant tax rises, we must focus our minds on how to escape the ‘doom loop’ of stagnant growth and falling productivity. A far more ambitious trade deal with Europe — including a bespoke UK–EU Customs Union — would be the single most effective measure Ministers could take to boost growth, jobs and living standards. The potential benefit to the Exchequer is estimated at up to £25 billion a year, if not more.

That is why I am encouraging colleagues to support my Ten Minute Rule Bill on 9th December.

Parliament has a responsibility to listen to households, workers and businesses across the country. And I know that support for a stronger, more constructive relationship with Europe does not begin and end with the Liberal Democrats.

So, I hope we can work and vote together to secure a better deal with Europe — one that delivers the growth our country urgently needs.

Yours sincerely,

Dr Al Pinkerton MP

Member of Parliament for Surrey Heath

Liberal Democrat Spokesperson for Europe

Liberal Democrat Policy Briefing - Bespoke UK-EU Customs Union

What are we proposing?

For the UK to form a new, bespoke customs union with the EU by 2030.

Which customs union would we join?

EU member states are in a customs union with one another, covering all goods. The EU also has customs unions with some non-member states. For instance, Andorra.

Most notably, the EU has a customs union with Turkey - which has been in place since 1995. This customs union does not cover all goods - for instance, agricultural goods are exempt.

We propose the UK having its own customs union with the EU. We would want this to cover most goods - but not agriculture. We’d negotiate with the EU to get the best deal for the UK.

Would the UK get any say in the EU’s Common External Tariffs or its Free Trade Policy?

We would ask the EU to ensure that countries with which it is negotiating an FTA are under a duty to negotiate in parallel with the UK (this is something which has in the past been suggested for the EU-Turkey relationship).

Trade expert Sam Lowe has suggested that “[t]he UK-EU agreement could involve more concrete consultation mechanisms; perhaps even allowing the UK to observe but not vote in relevant EU trade policy committee meetings” and has said that fears that the UK would end up in the Turkey situation of being disadvantaged by new EU FTAs are “overstated” because of the differences between the two countries (source).

Would this deal replace the UK-EU trade deal (the Trade and Cooperation Agreement)?

This would supplement and improve the existing deal rather than totally supplanting it. For instance, there would be goods which are not under the scope of the customs union (e.g. agriculture).