UK pitched single market for goods with EU, as it pursues deeper trade ties

The UK government pitched the creation of a single market for goods with the EU as the cornerstone of an ambitious attempt to reintegrate British trade back into Europe, the Guardian can reveal.

During recent visits to Brussels, the Cabinet Office’s top official on EU relations, Michael Ellam, presented the idea to deepen the UK’s economic relationship with the bloc.

But in a sign of the challenge Keir Starmer’s government faces in securing growth through a closer relationship with Europe, sources told the Guardian that EU officials rejected the idea – and instead suggested a customs union or economic alignment through the European Economic Area.

Those ideas are impossible under Starmer’s red lines. He said in 2024 the UK would not rejoin the EU, the single market or customs union in his lifetime. The EEA – a single market of 30 mostly EU countries – would also mean accepting free movement of people, another Labour red line.

UK government sources denied the idea that a single market for goods had been definitively rejected by the EU and said it was among a range of options being discussed before a summit tentatively pencilled in for 13 July.

The UK and EU have not yet agreed a forward-looking agenda to be launched at the summit. Both sides hope to announce a veterinary agreement to ease trade in food, drink and animal products, an accord linking emissions trading schemes and to break the deadlock over a youth mobility programme – three deals promised at the last EU-UK summit in 2025.

But Labour’s attempts to deepen the economic relationship are hitting the same buffers Theresa May encountered with her Chequers plan when she tried to craft a “common rulebook” for goods, without free movement of people, during the Brexit negotiations.

EU officials want to avoid a complicated relationship with the UK that could prove an attractive model to anti-EU populists in the 27 member states. For instance, it is argued that a special deal for the UK could embolden a Eurosceptic candidate in France’s 2027 presidential elections to argue that Paris should pay less attention to single market rules. Other countries, it is suggested, might question their contributions to the EU budget if the UK is deemed to be getting special treatment.

An EU diplomat said the EU’s approach was based on its interests: “If you start going back on those principles – leading to a non-member being treated better than an actual member – you certainly would trigger an internal debate on the fundamentals of [EU] cooperation.”

Both the prime minister and chancellor have said they are keen to explore alignment on goods. In her , Rachel Reeves said there was “a strategic imperative for deeper integration between the UK and EU – in our shared need for greater economic resilience”.