‘It will be a very big moment’: can Labour revisit Brexit – and heal bitter divisions with Europe?

With one hand raised to wave to the cheering crowds, a beaming Tony Blair cycled through the streets of Amsterdam, as the big beasts of the European project trailed behind him. It was his first full European summit as prime minister, in June 1997.

Across the EU there was a sense that Blair’s arrival would be a turning point not just for the UK but for the European Union as a whole. One Italian news agency greeted the new British PM as “Tony Blair superstar”.

The pro-European prime minister had just swept into Downing Street with a landslide, ending 18 years of Tory rule, and the excitement was palpable.

Europe could at last advance its ambitions for political and monetary union without being held back by the recalcitrant Brits. So much attention was lavished on Blair that the giants of European integration at the time, German chancellor Helmut Kohl and French president Jacques Chirac, were said to have felt put out, particularly when the new boy then proceeded to come first in a bicycle race for heads of government, resulting in headlines like “Blair takes the lead in Europe”.

For pro-Europeans everywhere it would, however, prove to be a false dawn.

Twenty seven years on, Keir Starmer will, in all probability, be the prime minister who welcomes heads of government from more than 40 European countries to Blenheim Palace on 18 July, as the leader of Brexit Britain.

Part of Starmer’s challenge, as he hosts the gathering of the new European Political Community (EPC) will, everyone agrees, be to begin rebuilding links and friendships shattered by the UK’s traumatic exit from the European Union that followed the 2016 referendum.

The EPC was set up in 2022 by France’s president, Emmanuel Macron, in the aftermath of Russia’s invasion of Ukraine to discuss big strategic challenges that Macron thought would be best dealt with outside the structures of the EU.

Despite that, in the grand surrounds of the home of the Churchill family, there will be one subject on everyone’s mind. “It will be a very big moment indeed,” said a former UK foreign office minister. “It will set the tone for a new UK approach to Europe after Brexit.”

The issues that have dominated so much of British politics for almost a decade – the UK’s exit from the EU, its post-divorce settlement, and how to repair the damage – have been almost entirely missing from the current general election campaign.

The fact that Brexit divided both the main parties and their supporters, and then failed to deliver the benefits that the leave campaign promised for the economy and on control of immigration, persuaded leaders of the main UK parties that, in campaigning terms, it would be too divisive a subject to broach on doorsteps.

For Starmer, however – assuming Labour wins on 4 July – all that is about to change. The omerta will not hold much beyond polling day.

Strategically, with the prospect of Donald Trump returning to the White House in January, and in view of the continuing conflicts in the Middle East and Ukraine, and China’s growing superpower status, the UK’s future relationship with the EU will come centre stage.

Economically too, improving trading links with the EU that have been hit so badly by Brexit will be critical. A Starmer government will desperately need, somehow, to power up economic growth at home in order to deliver on his promise to rebuild the country and its public services, with public finances so tight.

The Labour leader, conscious of not being seen to override the will of the people, insists he will not seek to rejoin the EU’s single market or customs union. But plenty of economists say he will struggle to maximise growth – his No 1 priority – and revive UK exports, without better access to the huge European market on our doorstep. So how will prime minister Starmer perform this most delicate but vital of diplomatic dances, and reset the relationship?

One thing is for sure. The new Labour prime minister will, like Blair, be welcomed with open arms as something of a conquering hero.

“Political leaders are students of power; how to acquire it, how to keep it,” says Kim Darroch, who served as British ambassador to the US from 2016 to 2019 and before that as the UK’s permanent representative to the EU in Brussels for four years from 2007. “So if Starmer wins big, with the 200-plus majority some recent opinion polls suggest, he’ll find himself mobbed at the two summits which follow hard on the UK election, the Nato summit in Washington [9 to 11 July] and the European Political Community.

“His fellow leaders will seek him out like moths to a flame. Everyone will want a selfie with him; and everyone will want to divine how this seemingly uncharismatic middle-aged north London lawyer achieved the biggest election victory in decades, a victory moreover against trend, after the hard right dominated the recent European Parliament elections. Starmer should try to enjoy it; he’ll never get another moment like it.”

Diplomats fully expect an early announcement on defence and security cooperation between the UK and the EU in the first weeks of a Starmer government, possibly at Blenheim. Labour has also said it will seek a new veterinary agreement to make trade in degradable goods easier in both directions. There may also be talk of deals on youth mobility and artists’ visas.

But diplomats say EU leaders will, while being super friendly, not simply roll over to whatever a Labour government under Starmer wants, in the afterglow of his victory.

Darroch says EU leaders see Brexit as a big reason for the Conservatives’ implosion, and the scars of battle remain. He expects them to say to Starmer: “We like you more than the other lot. But Brexit is done. We’re entirely happy with the post-Brexit arrangements, which suit us well. And we’ve moved on – we have other challenges to address.”

In other words, don’t think that having put everyone, including yourselves, through so much pain, you can simply “cherry pick” your way back in, cherry by cherry.

Darroch expects the EU to be “discouraging” about a Labour government using the 2026 review of the UK/EU trade and cooperation agreement to launch a major renegotiation, and to argue instead that it can only be about minor issues.

Peter Ricketts, a former UK ambassador to Paris, agrees: “In the security and defence areas of the relationship there could be quite a quick improvement in relations and closer working links.” But he adds that “in the more treaty-based and regulation areas it is going to be slow going”.

Charles Grant, director of the Centre for European Reform, who talks to European governments regularly, says the EU will extract its price for rebuilding links beyond security and defence cooperation. “EU leaders will tell him [Starmer] that if he wants things out of the EU – such as a deal on veterinary standards to reduce border checks on food, animals and plants – he will have to accept some of their asks. For example, the EU wants a deal on youth mobility, to make it easier for young people in the EU and the UK to spend more time on the other side of the Channel. And it wants a deal on fish. The current deal giving the EU access to British waters expires in 2026, after which there will have to be an annual negotiation unless the UK accepts another long-term deal. The EU believes in bargaining and trade-offs, which a Starmer government will have to go along with if it wants to improve the EU-UK relationship.”

Grant adds: “There will be goodwill towards a Starmer government but they worry that it doesn’t know what it wants from Europe. Their No 1 message to Labour is, give us clarity about what you want to achieve.”

In reality, no one in Brussels is talking much about Brexit any more. There will be great interest in the UK election and the demise of the Tories, but EU officials working on EU-UK relations joke these days they have little to do. On Sunday, the eighth anniversary of Britain’s vote to leave, the EU will be preoccupied with geopolitical turmoil, above all the brutal, grinding war in Ukraine, the possible return of Donald Trump to the White House, growing tensions with China and the humanitarian disaster in Gaza.

Then there is the bloc’s internal politics, following the European parliament elections that saw big gains for the far right in France and Germany. The fabled Franco-German motor that drives forward the European project was already stuttering before the elections. Now the EU’s biggest states are even weaker after calamitous results for the ruling parties. Macron has made a risky election gamble that could leave his party reduced to third place in the National Assembly; in Berlin Olaf Schlolz presides over a deeply unpopular coalition that is struggling to find €40bn to fill a budget blackhole.

Against that troubled backdrop, EU leaders will hold a summit on Thursday and Friday to agree an agenda for the next five years and decide whether Ursula von der Leyen gets a second term as European Commission president. Keeping von der Leyen in post would be seen as a positive for the EU-UK relationship. An anglophile who once studied at the London School of Economics, the commission president signed the Windsor Framework with Rishi Sunak, ending years of dispute over trading arrangements for Northern Ireland.

Since that agreement, the EU and UK have at least been back on speaking terms. But contacts have dwindled. While the EU has regular summits with Switzerland, Norway, Canada, New Zealand, China and Japan, there is no top-level gathering with its near neighbour across the Channel.

Some in the EU are keen for that to change. Last week the influential German thinktank, the Bertelsmann Stiftung, called for a rapprochement between the EU and UK that would go far beyond the “limited and unsatisfactory” relationship defined in the trade and cooperation agreement signed with Boris Johnson’s government. “We believe if you look at the EU’s agenda, there are a lot of real incentives and reasons to reconnect with the UK in a way that is in the EU’s interest, crucially,” said Jake Benford, co-author of a report by the Bertelsmann Stiftung. It was, he added, an “absurd situation” where the two sides have so “very little room to talk to each other”.

Many EU diplomats in Brussels are far from convinced, however. “I don’t think there is anything new that we could do that we haven’t already discussed,” said one.

Brexit, of itself, caused the EU to reinforce its own defences. During the acrimonious process, the EU quickly drew up red lines, centred on the idea that no country outside the bloc could enjoy the same benefits as a member state. Senior EU diplomats say these fundamentals are unchanged. A new Labour government would have a lot of persuading to do if it sought closer links with the single market without being a member and without paying into the EU budget or accepting freedom of movement rules on immigration.

“It is like catching a hedgehog. You touch it and it puts itself in a defensive position,” said one EU diplomat describing the EU’s response to rethinking the UK relationship. “Nobody will publicly talk about a rapprochement with the UK unless it is the UK that starts.”

Herein lies Starmer’s challenge. He has made economic growth the central challenge of a first-term Labour government. His ambition is to achieve the highest economic growth in the G7. But the Office for Budget Responsibility has repeatedly said that Brexit and being outside the single market and customs union means a 4% hit to UK GDP. In other words you cannot maximise growth outside the EU’s economic structures.

A report by the thinktank UK in a Changing Europe drew attention to this same problem. “With economic growth a priority, the most obvious source of such growth will have been ruled out in the manifesto,” it says. “Any gains from technical improvements will be relatively minimal: useful in reducing trade frictions, but not enough to really address the continuing economic impacts of Brexit.”

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Another senior diplomat said there was little prospect of any big change to the UK’s economic relationship with the EU in a Starmer first term. Even after that it would depend on goodwill from the EU.

Darroch added: “Can this self-harm be tolerated long-term? We could stay outside the EU but re-enter the single market by joining Norway in the European Economic Area. But this would mean accepting free movement and paying into the EU budget. All very difficult, and looking like the epitome of a question for the second term.”

Grant said it could be that only the undesirable escalation of geo­political instabilty would push the UK and EU back together. “The difference with 1997 is that the UK is now far down the list of the EU’s priorities, Grant said. “Knowledge of and interest in the UK are minimal. However, the nastier the geo­political context, for example with both Putin and Trump menacing Europe, the more likely are moderate leaders in the EU to try and recruit Starmer as an ally.”

But to think that the UK can simply opt back in under Starmer and Labour, as and when it wants, seems as unrealistic as the hope that burned so bright back in 1997.