The United Kingdom emerges from a long and hugely consequential period of centre-right populism with an exceptionally powerful centre-left Labour government. This bucks the European trends of either political stalemate or chaos, combined with a marked shift to the right. A moderate, Europe-facing government in Downing Street raises hope that British resilience and resurgence can bolster European unity in a geopolitical world. Yet barriers to reconnecting with the EU remain – and the surge of support for Reform, a populist protest party, is a reminder that British politics remains volatile.

As voters across the continent increasingly question democracy as an effective system of government, the force of popular choice was in full display at yesterday’s UK general election. Voters turned out in their millions to decisively expel the centre-right Conservative Party, one of the most successful election-winning machines in political history, after almost a decade and a half of uninterrupted rule.

This period was marked by political misjudgment, unforced policy errors and personal failings by the political class at a scale rarely experienced in developed countries. Combined with global developments, this has led to creeping economic decline and a rise in regional inequality and societal divisions, the impact of which is felt in households across the country.

Labour’s victory under the new prime minister Keir Starmer – edging past 410 seats in a parliament of 650 for a majority of around 170 – is in the same territory of Tony Blair’s 1997 landslide victory, which heralded in 13 years of virtually uncontested Labour rule. Additionally, Labour defeated the Scottish National Party in Scotland, one of the few open battle lines in the run-up to election day.

There is no precedent in British politics of a party coming from opposition and overhauling an electoral deficit that grew in the past two general elections in quite this way. Labour’s ideas did not capture the imagination of the electorate and the result is largely a reflection of the anger of British voters towards the Conservative party’s record.

Economic stagnation, but a strong foundation

Economic growth since 2010 has been lacklustre to the point of stagnation. Measured by disposable income, British households are on average worse off than they were at the beginning of the outgoing parliament. The average middle-income household in the UK is today 20% poorer than its counterpart in Germany. Government debt has risen from 65% of GDP to almost 100% during the Conservative’s time in office, while wages flatlined and the tax burden as a percentage of GDP is at its highest level since the 1960s.

Brexit, a project undertaken without a truthful public debate on the economic and political trade-offs involved, exacerbated longstanding and deep-seated problems, notably a toxic combination of low growth. This economic sluggishness was largely due to a productivity gap that has tripled since 2008 vis-à-vis countries such as Germany and France, as well as rising inequality. The UK has the highest levels of regional economic disparity of any developed country in the world. Unlike Blair in the late 1990s, Labour inherits a financial legacy more comparable to that of Clemence Atlee’s Labour government after WWII.

With this in mind, it is easy to forget that the UK remains one of the 30 richest countries in the world, boasts the world’s sixth largest economy and is hugely resourceful as an innovative powerhouse, with world leading firms in sectors including financial services, aerospace, life sciences, creative industries and education. Crucially, the country’s strong governance and well-established rule of law has proven to be resilient in the face of populist pressures. Going forward, the country remains well-positioned for future challenges.

A strong services sector and advantages specifically in the production of renewable energies – much needed by an energy-starved continent on the other side of the channel – further stand out as considerable assets. The UK’s cultural soft power, along with its diplomatic clout and military resources, including a nuclear deterrent, make it a crucial stakeholder and contributor to European security. Since the return of geopolitics and Russia’s invasion of Ukraine, security has resurfaced as a first order priority. So, what does the new UK government mean for the bigger European picture?

Boosting trade while keeping Brexit

The narrow issue of EU-UK trading relations, a troubled and unhappy arrangement that looks set to wipe a striking 4% off UK GDP per year in the long run (€38bn in 2018, compared to EU membership fees of €15.6bn in that year), will certainly not change overnight. This is despite the single market being the most obvious source of growth for a new Labour government looking to kickstart its economy.

The exhaustion of Brexit, which proved hugely divisive across the country, caused Labour to exclude any substantial rapprochement to the EU single market, or indeed the possibility of rejoining. Indeed, the day before the election, Keir Starmer doubled down on this approach, all but excluding the chances of the UK rejoining the bloc “in my lifetime”.

Therefore, the more interesting question is what Labour has not excluded. Here, permitting oversight of the European Court of Justice (ECJ) and other regulatory authorities, a decision on the best form of dynamic alignment with the EU’s regulatory regime and commitments on level playing field provisions in areas the EU finds important, would open up new spaces to develop the current post-Brexit deal and unlock further positive agendas. But in much the same way that the impact of Brexit has been gradual rather than explosive, any economic rapprochement will move at a similarly slow pace, requiring significant confidence-building measures.

Shared security interests and a new pact

Focusing on shared security concerns with the EU and key member states is the more immediate game in town. Labour’s proposal of a security pact with the EU will be met with openness in Brussels. Indeed, a new bilateral security pact with Germany is likely to be announced this summer, owing, to be fair, to work carried out under the Conservative government. A possible new French government that is sceptical of the EU and ties with Germany will certainly open up new space for a stronger UK-German axis.

In any case, Labour will quickly find itself in the thick of global affairs, with a NATO Summit next week and – crucially – the opportunity to host the fourth summit of the European Political Community (EPC) in London in mid-July. Keir Starmer, who will be the envy of many of his embattled centre-left European counterparts, will without doubt use the opportunity to set a new tone of rapprochement with Europe.

European leaders, especially those in the EU and accession countries, will, in turn, look out for what Labour’s investment might be. Look out for further support for Ukraine, including commitments to support its reconstruction, as well as cooperation on energy security and migration.

But if Labour’s careful re-orientation towards Europe is to produce tangible outcomes, it will take two to tango. The EU has had no discernible political position on its relations with the UK since the Brexit negotiations were concluded in 2020, but its agenda arguably dictates reaching out to its former member.

With the European Commission and key member states intent on shaping a new European security order, key strategies include enhancing economic security, moving forward with EU enlargement and engaging with wider Europe in a more strategic way as it searches for likeminded partners.

This will require new levels of pragmatism, flexibility and policy coherence from the EU, as well as engagement with the UK, a likeminded ally by any standards. This will quickly emerge as a test case in its bid to be a more coherent geopolitical actor.

Ideas for a reset

A starting point for resetting EU-UK relations, as we set out in more detail here, would be for both sides to quickly define shared strategic priorities and strengthen the institutional backbone of cooperation. Instituting EU-UK summits is an example of how an era of improved cooperation could begin.

Foreign policy and security cooperation should be improved via specially designated working groups. Gradually deepening and expanding trade and investment relations should occur in a parallel process, commensurate with new levels of trust and confidence.

Internal political dynamics in the UK will remain influential here. One thing to look out for, given the huge size of Labour’s majority, are new and unforeseen internal dynamics created by the intake of new MPs from across the political spectrum. The revised parliamentary arithmetic could pressurise the leadership to be more ambitious on shifting closer to the EU.

This would represent an inverse logic to the effect the European Research Group, a caucus of hard right, Eurosceptic Conservative MPs, had on mainstream Conservatives in the last parliament. A strong performance of the pro-European Liberal Democrats, who have gained more than 70 seats, will add further pressure.

The future of the Conservative Party, meanwhile, is wide open. The populist – but ideologically empty – Reform party gained almost 15% of the vote. This remarkable result was largely from protest voters who are furious with the Conservatives.

This is without doubt a reminder of the volatile political climate of this decade. Reform’s leader, Nigel Farage, is a hugely effective political operator. Having been elected to parliament on his eighth attempt since 1994, he now finds himself on a new political stage, suggesting populism in the UK may not be quite as dead as some might hope.

About the author

Jake Benford is Senior Project Manager on Bertelsmann Stiftung’s Europe‘s Future programme.

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