What a New Prime Minister Means for UK Trade Policy

Andy Burnham will be the UK’s seventh Prime Minister since June 2016, an embarrassment for a country that thought its electoral system brought political stability. This cannot simply be a bad run of individuals, there are structural problems – with trade policy unusually close to centre stage following the 2016 referendum to leave the EU.

Keir Starmer departs as UK Prime Minister with the irony that his time in office offered more continuity with his predecessor Rishi Sunak than the “change” promised in his 2024 election. Collectively they normalised a post-Brexit default of strategic inertia only slightly disguised by typically minor daily announcements that might have proven Parkinson’s Law of Triviality.

To be fair their inheritance was tough, a UK promised unattainable glories by the winning side of the referendum running into the reality that geography really matters to many policies coupled with the financial constraints and low growth of an ageing society, and the impatience and falsehoods of social media. Starmer’s popularity in the UK was actually greater than that of President Macron in France or Chancellor Merz of Germany, though that is a rather low bar.

Having earned a large parliamentary majority that allowed for major changes this was left unutilised in large part. There was an initial belief that growth would return simply by virtue of being a different government, then confusion revealing a lack of serious planning when it became clear this was not the case. Such is a common error made in today’s global political economy.

Where there were trade policy successes these were more about formalising what was already evident. Most notably the government openly admitted what predecessors had practiced but not said, that the EU is the UK’s most important trade partner. Like them however it struggled with being just another third country meaning tough EU red lines, no special deals, and thus a limited value reset. Meanwhile desire to maintain good US relations has led to an increasingly controversial deal on pharmaceutical pricing to avoid tariffs.  

Absent from the Brussels table, any global UK voice came through membership of the CPTPP, emerging as a more important group of countries following President Trump’s renunciation of global trade rules. That trade agreement has yet to bring any noticeable economic benefit however, something also likely to be seen with new India and Gulf deals. At least the 2025 trade strategy talked of alternatives to FTAs even if these were defined rather loosely.

Such were the challenges of a government operating without a vision to enhance a predominantly services and advanced manufacturing economy in a time of global nostalgia for old fashioned factories, or to reconcile prioritising growth with the privileged position that gives to predominant multinational companies. These problems were made even tougher by the increasingly mercantilist approaches of the three largest economic powers of the US, China, and the EU. None of these however excused how even issues under government control, such as funding and visa issues for a globally renowned university sector, were largely ignored.

Former Manchester Mayor Andy Burnham is so far offering the reassurance that he can change the country’s trajectory without transforming any real fundamentals. His centrepiece so far is devolution from an undoubtedly over-centralised state to generate growth in every postcode including through reindustrialisation loosely defined. With profound budget constraints and uneven performance of local authorities, what may end up being crucial is whether this narrative can be developed to enable greater boldness across a wider agenda. Many Labour insiders are sceptical.

For all of the reluctance of Labour politicians to focus on the issue, EU relations will remain central as they are for all the bloc’s neighbours. The UK is simply not an attractive location for most manufacturing while there are too many obstacles to participation in regional supply chains, and Brussels will not lower those barriers without UK commitments to allow movement of people. No amount of other bilateral trade agreements will fix this problem, handling of which is made worse by the fact that senior UK figures know this in private but feel it cannot be admitted in public, and the commentariat who thus advocate doing nothing because anything else is too difficult.

If a narrative around people-centred devolved government can be combined with reopening freedom of movement then this is the potential game-changer in Brussels, the only major card the UK can currently play and one to be used wisely. Suggestions of an independent review of the options may be the best way to proceed once current negotiations around food and drink trade, youth mobility, and alignment of emissions trading schemes are complete. Then discussions will turn to the next Labour Party manifesto in which a position of applying to return to the EU will at least be discussed, and at least relaxing existing red lines is the central case.

Worryingly, UK politics still believes that there can be a regulatory dividend from Brexit despite ten years of failing to find this. All evidence suggests that extra trade costs will always be greater than any potential benefits, not least with the EU aware that the US and major companies rightly see the UK government as a soft-touch in their regulatory battles. This is a game that the UK is best stepping away from, and the way to do that would be to finally put trade and regulatory policy on a properly transparent and statutory basis requiring Parliamentary agreement.

Meanwhile the UK will have to continue handling the US and China with care, not least as there is no realistic prospect of a full trade deal with either for political reasons. US trade needs protecting but not at any price, while a rightly relatively open approach to Chinese imports and investment does not automatically mean greater services access not least with rumours of an impending case for the UK to defend under the Bilateral Investment Treaty.

Negotiating new trade agreements will continue to have a very limited value particularly while implementation is treated as a third-order priority. As previously suggested, an annual public review of progress and commitment to upgrading old agreements would at least do something to drive progress not least given continued poor UK export performance.

By some distance the post-2024 ministerial team of Johnathan Reynolds and Douglas Alexander in the Department for Business and Trade was the best the UK has had since the referendum. Unfortunately they both moved on in a 2025 reshuffle, and restoring some heft to the portfolio is recognised internally as important including for relations with Brussels notwithstanding the lead in talks being taken by Cabinet Office Minister Nick Thomas-Symonds. Globally it seems unlikely that a confused post-Brexit UK can play much role in the current global rules crisis, so attentions are best directed regionally.

There is a crisis in the European political economy, more so in the traditional leaders of Germany, France, and UK, and worst of all in the latter because of the shambolic handling of EU relations over ten years. Many leaders have failed to meet the moment, not least in not grasping the global forces with which national governments are struggling. Nothing that Andy Burnham has yet said suggests a successful pathway through the difficulties, and yet with better communication skills than his predecessor in particular, there is at least some reason for hope this allows the space to grasp issues that predecessors have feared to touch.