UK and EU sign new trade, fishing and defence deal – what do economists think?

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19-05-2025

The UK and EU have announced a range of historic and wide-ranging new agreements touching on trade, defence and borders.
Since the 2016 Brexit vote, COVID and conflict have changed the global economic landscape dramatically – with consumers feeling the effects every day. So the time could be ripe for a 'reset' of relations between the UK and its largest trading partner.
Beyond trade, the two sides have agreed to negotiate further on a youth mobility scheme. And in future, travellers with UK passports will be able to use e-gates and avoid lengthy queues in some European countries.
But the agreement is also fraught with political risk, as opposition parties circle to capitalise on the vexxed question of tighter UK-EU relations. We asked a panel of experts for their analysis of the announcements.
Maria Garcia, Senior Lecturer in International Relations, University of Bath
These were the first steps towards the much-vaunted Labour UK-EU 'reset'. The announcement of agreements between the UK and EU covered security, energy and fisheries.
But the announcement falls short of key UK priorities for the reset, which includes a series of measures to facilitate trade with what is still the UK's largest trade partner and market. The bloc represented 48% of UK goods exports, 36% of services exports, and 51% of goods imports in 2024.
Fisheries represent roughly 5% of UK agriculture, fisheries and forestry exports, and 0.03% of the UK economy. That may be a smaller slice of GDP than many people might think. But given the regional concentration of the fishing industry, it is vitally important to those communities. The situation is the same in EU countries.
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Fisheries was a difficult issue to tackle in the negotiations for the 2021 UK-EU trade and cooperation agreement (TCA). Under the TCA, the EU agreed to phase out 25% of its catch share in British waters.
And there was an understanding on permits to fish species subject to fishing quotas that would allow fleets to fish in each others' waters. The terms of this were due to expire in June 2026.
French president Emmanuel Macron insisted that without a deal on fisheries he would not accept other areas of the reset. And North Sea countries joined the call to negotiate a deal on fish. This represented a difficult ask for the UK government, given fierce criticism from opposition parties.
This agreement settles access to fisheries for the next 12 years. Despite its limited economic impact in absolute terms, the political significance should not be underestimated. It is a clear signal of the Starmer government's commitment to move forward in the relationship with the EU – particularly relevant at a time of complicated global trading relations.
Other proposed measures include waiving the requirement to submit safety declarations, agreement on sanitary and phytosanitary (SPS) measures and a veterinary agreement to facilitate agricultural trade. These matters are included in the newly published memo in which the UK and EU commit to work towards agreement on SPS. However, there is no announcement as to when this might be finalised.
But the settlement on fisheries means an important hurdle has been overcome on the path towards the reset.
Mausam Budhathoki, Postdoctoral Researcher, Institute of Aquaculture, University of Stirling
This UK-EU agreement has major implications for the Scottish salmon industry, a vital part of Scotland's economy. In 2024, salmon exports hit a record £844 million, with France accounting for 55% of the total. Salmon is the UK's top food export, and as such stands to benefit from the reduced customs checks and paperwork outlined in the deal. This will ease access to EU markets.
Since Brexit, the industry has faced export delays, higher costs and an estimated loss of £80 million–£100 million in EU sales due to new regulatory hurdles. The UK government projects the agreement could add £9 billion to the economy by 2040, with agrifood sectors like salmon farming gaining. Yet, the deal extends EU fishing rights in UK waters until 2038, which may disrupt marine ecosystems essential to salmon farming.
Although salmon are farmed in sea pens, they rely on clean, stable marine environments that could be affected by increased fishing activity. The agreement also remains politically sensitive. Future UK-EU disputes or changes could bring revisions, creating uncertainty for long-term planning and investment. While the deal offers clear trade benefits, the industry must balance growth opportunities with environmental and political risks.
Conor O'Kane, Senior Lecturer in Economics, Bournemouth University
The deal looks like the beginning of a path to closer economic ties between the UK and EU, reversing a trend of UK disengagement from Europe following Brexit.
Growth in the UK economy has been sluggish in recent years, and exporters are facing uncertainty as a result of recent US trade policies. So any opportunity for UK firms to have easier access to EU markets has to be seen as a positive for economic growth.
Faster economic growth will be absolutely key for UK chancellor Rachael Reeves to meet her 'fiscal rules' (reducing national debt and only borrowing money for investment). It will also help to avoid further cuts to government spending. UK borrowing is currently above what the Office for Budget Responsibility was projecting only a year ago.
The agreement on security and defence is one area of particular interest where growth is concerned. According to the UK government, the agreement 'paves the way' for the participation of UK firms in the EU's €150 billion (£126 billion) joint procurement programme to rearm Europe.
The EU is stepping up its security spending in light of the Trump administration's desire to reduce its support for Nato, and there is real potential for the UK defence industry to benefit.
Kamran Mahroof, Associate Professor of Supply Chain Analytics, University of Bradford
The UK-EU reset deal marks a pragmatic shift in post-Brexit relations. And for consumers, it should bring some meaningful – if modest – improvements.
One of the most tangible benefits is likely to be at the supermarket. With fewer checks and less bureaucracy for food imports, particularly animal and plant products, supply chains should become smoother and more efficient. In theory, this means fewer delays, better availability and – eventually – lower prices on everyday items.
For consumers who have felt the impact of rising food costs since the UK left the EU, this will be a welcome relief.
For businesses such as meat producers, it means British burgers and sausages can hit EU shelves again. This is a big win for UK food producers. After years of red tape and restrictions, it opens the door to more exports, more jobs, and fresh confidence in the industry.
It's a sign that trade ties are warming up, even if some paperwork and rules still make things tricky, especially for smaller businesses. All in all, though, it's a step in the right direction.
Still, the deal has limits. It doesn't restore full single market access or the breadth of consumer protections that EU membership once guaranteed. And while fishing rights might seem distant to many urban consumers, the economic fallout in coastal communities could eventually be felt more widely.
Phil Tomlinson, Professor of Industrial Strategy, University of Bath
Defence was hardly mentioned in Boris Johnson's 2021 EU-UK trade and cooperation agreement. But the world has changed – especially over the last six months. The US no longer appears willing to guarantee Europe's security.
The new EU-UK defence and security pact recognises the current state of geopolitics and seeks to mitigate Russian and other external threats by investing in European defence capabilities, at scale.
For UK defence and defence-related firms – many of which are already global leaders in the field – this is an opportunity to participate in a £150 billion defence fund called Security Action for Europe (SAFE). Since the end of the cold war, UK and European defence spending has fallen significantly, relative to GDP.
This new pact, and the heightened focus on defence, should support UK jobs and bring growth to places across the country. This is not only true for arms manufacturers such as BAE Systems and Babcock, but in related sectors such as cybersecurity which are of increasing strategic national importance.
This also opens up the potential for more synergies and spillovers in several industrial strategy priority areas – for instance, between the defence sector and digital, and between AI and cyber technologies. To take advantage, the UK government's new industrial strategy will need to provide substantive support for skills in these sectors.
The news that British steel exports will be protected from new EU rules and tariffs is also welcome. The UK steel industry faces an uncertain future, with the challenges posed by the transition to net zero and the crises at Port Talbot and Scunthorpe. But this is a critical sector – with steel a crucial input for UK infrastructure and its defence industry.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Mausam Budhathoki receives funding from the EATFISH project, funded by the European Union's Horizon 2020 Research and Innovation Programme (Grant 956697)..
Phil Tomlinson receives funding from the Innovation and Research Caucus (IRC).
Conor O'Kane, Kamran Mahroof, and Maria Garcia do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.