A leading think tank strategist has cautioned against Britain returning to the EU customs union, describing the policy as “toxic” amid growing calls from politicians across party lines.
Fred de Fossard, Director of Strategy at the Prosperity Institute, told GB News that the debate has resurfaced with the Liberal Democrats actively campaigning for rejoining, while numerous Labour MPs and cabinet ministers have shown support for the idea.
Mr de Fossard argued that advocates of rejoining are operating under “a very static analysis of the economy in Britain’s relationship with the European Union,” suggesting they have wrongly concluded that leaving the customs union has inflicted severe damage on cross-Channel trade.
“I just don’t think that is true,” he stated.
The Prosperity Institute strategist acknowledged that Britain’s departure from the customs union at the close of 2020 and beginning of 2021 did involve an adjustment phase with associated costs, as companies adapted to different supply chains and customs procedures.
However, he maintained that much of the trade decline during that period stemmed from factors unrelated to Brexit itself.
“A huge amount of that cost and decline in trade in that period was also caused by the pandemic and lockdowns,” Mr de Fossard explained.
He warned that returning to the customs union would have immediate and far-reaching consequences for Britain’s trade relationships worldwide.
“What it would do immediately if we rejoined is mean that European tariffs would apply from the UK to the rest of the world. So the 2000 tariffs that have been abolished in the last few years, they’d all have to be reimposed,” he said.
Fred De Fossard has warned that the UK rejoining the customs union would be a ‘£40billion trap’
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GETTY / GB NEWS
Crucially, he noted that America remains Britain’s largest single-country trading partner, and rejoining would prevent any negotiation of preferential tariff arrangements with the Trump administration.
“Going into the EU customs union would completely tie Britain’s trading hands behind its back,” he stated.
Mr de Fossard explained: “We wouldn’t be able to get a lower tariff rate from Donald Trump from the United States, which is our biggest single country trading partner.
“And regardless of the difficulties that the Trump administration is having with the Supreme Court domestically at the moment, going into the EU customs union would completely tie Britain’s trading hands behind its back. We would not be able to get beneficial arrangements with the United States, or indeed any other country around the world, because we’d be dependent on Brussels.”
Mr Fossard told GB News that the customs union is ‘toxic’ and ‘fundamentally weak’
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GB NEWS
The Prosperity Institute director also raised concerns about the EU’s expanding carbon pricing regime, which he said would impose significant costs on Britain if it rejoined the bloc’s trading arrangements.
“The European Union is expanding additional carbon pricing to the cost of transport, to the cost of domestic heating, to the cost of building houses, so that means the cost of concrete is going to go through the roof, the cost of tarmac is going to go through the roof,” Mr de Fossard warned.
He explained that Brussels intends to apply climate-related levies to virtually all physical infrastructure, products and construction materials across the union.
“We are mercifully free of that for the time being now,” he observed.
Mr de Fossard suggested that customs union membership would inevitably lead to pressure for full regulatory alignment, as advocates would argue this represents the simplest path to smoother EU trade.
He told GB News: “If it reasserts the economic gravity of the European Union to the British economy, then its advocates will say, well, then the easier thing to do will just be in line with all regulations to make it easier for us to trade with the European Union.
“But that doesn’t get over the fact that the European Union economy is fundamentally, structurally weak.”
Mr de Fossard emphasised that Britain operates as one of the world’s most sophisticated services-driven economies, with exceptionally high levels of AI adoption, internet usage and e-commerce.
“Joining a customs union makes no benefit to that,” he stated, adding that it offers nothing for the services-based trade that dominates British commerce.