Brexit has shrunk the UK economy – estimates vary from 3% to 5% - and slashed our trade. But worse may be to come, as the EU accelerates steps towards ‘strategic autonomy’, or self-reliance.

Economic isolation from the rest of Europe could soon threaten our access to the raw materials, technology and lifesaving medicines we need.

Defence

EU strategic autonomy means building a European defence capacity no longer needing US firepower. EU leaders want to mobilise €800 billion in additional and better coordinated defence spending, from national coffers and with European loan finance.

Keir Starmer has led on supporting Ukraine and cajoling Donald Trump. But the UK remains excluded from some key EU summits. And the EU 27 decide – the UK has no say - how much access UK defence suppliers will have to EU contracts.

Brexit Britain at the back of the queue?

However, EU strategic autonomy is not just about defence. It means deepening the single market, incentivising production in Europe and making sure the EU is first in the queue for crucial imported products.

If the EU is first in line – and it has the market clout to make that happen – Brexit Britain is not.

Take the European Commission’s recent proposal for a Critical Medicines Act (CMA). The CMA means Member States favouring EU-based suppliers over non-EU ones and clubbing together to obtain priority access to medicines and ingredients. It also provides for common EU stockpiling. The UK – already suffering from more acute medicine shortages than EU countries - is left out.

The EU’s Critical Raw Materials Act (CRMA) aims to ensure the EU’s ‘secure and sustainable access’ to materials like lithium, cobalt and graphite, including through partnerships with countries rich in those materials. Computers, mobile phones, electric vehicles and solar panels – among other things – cannot be made without them. Again, the UK is on the outside.

The Clean Industrial Deal will be another step towards EU strategic autonomy. The EU cannot match Chinese or US subsidies. But it can combine financial incentives with offering investors a huge border-free single market – which the UK no longer can.

CBAM barriers

Meanwhile, the EU’s Carbon Border Adjustment Mechanism (CBAM) – to be implemented from 2026 - will charge a ‘carbon tax’ on certain imports to the EU produced using polluting methods.

CBAM aims to help tackle climate change. But also to enhance the EU’s autonomy, by protecting it against ‘dirty’ competition, keeping strategic industries in Europe and by incentivising other jurisdictions to emulate the EU’s green policies.

As things stand, all British exporters to the EU in the heavy industrial and energy sectors covered by CBAM will need either to pay up or provide reams of documentation with each consignment, to prove goods are ‘clean’ and not subject to CBAM.

Strategic autonomy requires access to homegrown capital, so the EU is also working to develop a Capital Markets Union – now partly rebranded as a Savings and Investments Union. Without Brexit, this would have been a big opportunity for the UK financial sector. Now it could mean tougher competition and more regulatory barriers.

Can the UK limit the damage?

So what can the UK government do, in its much-vaunted ‘reset’ with Europe, to stop the EU’s push for strategic autonomy leaving us even further out in the cold?

The government needs to show EU leaders it wants to be within the European tent, a potential partner in strategic autonomy – not an unreliable neighbour liable to prioritise transatlantic links.

That means standing with the EU against attempts by the Trump White House to use aggressive trade policy to divide and rule.

Another obvious step is to sign a formal defence and security partnership agreement with the EU. Among other benefits, that would maximise the access that the UK, as non-member state, can have to defence procurement.

Deals on youth mobility and to cut red tape in EU-UK food trade could - in addition to their intrinsic value – help build trust.

The government should align fully with the EU’s Emissions Trading Scheme and with CBAM. That would avoid most of the additional trade barriers and show the EU that the UK will stand up to polluters rather than join a race to the bottom. It means signing up to a policy which the UK has had no say in designing. But that’s Brexit for you.

The UK should offer to work with the EU on health, including the development, manufacture and procurement of medicines. We have much to offer, including research capacity, clinical expertise and the NHS’s vast store of data that could be used – anonymised – for research purposes.

On securing the supply of critical raw materials, there may be less incentive for the EU to let the UK join its team. The government could seek to roll this in with defence and security – after all, access to critical raw materials is a security issue, both in economic terms and because weapons systems need these materials, too.

Bitter truth

But it comes down in the end to the same bitter truth.

Only by returning to the single market and ultimately to the EU can the UK make sure that we avoid drifting even further apart from our European partners, as they deepen their collective strategic autonomy.

In the meantime, the EU’s autonomy means the UK’s exclusion – or at best being a junior partner in crucial policy areas.

Mark English, Policy and Media Advisor to European Movement UK