Europe

The EU is demanding that any future British government pays significant financial compensation if they quit a post-Brexit “reset” deal as part of negotiations with Sir Keir Starmer.

Brussels has included a termination clause that would require London to pay a high level of restitution if they chose to exit a proposed EU-UK “veterinary agreement” to remove Brexit red tape for British food and drink exporters, according to a draft text seen by the FT.

EU diplomats have dubbed the stipulation a “Farage clause” that they said was designed to insure the bloc against the risk of Reform UK leader Nigel Farage becoming prime minister and making good on his threat to reverse Starmer’s attempted move closer to Brussels.

The clause states that if either side pulls out, it must pay compensation that would include the costs of setting up “the infrastructure and equipment, initial recruitment and training, in order to set up the necessary border controls”.

One EU diplomat said that it was a “safety provision to provide stability and a deterrent for Farage and Co”, adding that Brussels was looking to sign a deal that would endure past the current UK parliamentary term, which ends in 2029.

“The EU wants an agreement long-term and not only until 2029, should a change happen at the next election,” they said.

Starmer has made a veterinary, or sanitary and phytosanitary (SPS), agreement a crucial element of his plans to improve trading arrangements with Brussels, alongside a deal to re-link the EU and UK carbon pricing schemes.

Trade and industry groups have strongly advocated for such a deal that would remove almost all Brexit red tape faced by exporters of agrifood products. A 2024 study estimated a deal could boost UK food and drink exports by 22 per cent.

With Reform UK significantly ahead of both Labour and the Conservatives in the polls, EU diplomats said Brussels was increasingly alive to the risk of its planned deals with Starmer unravelling.

The EU text said that the UK would pay a fee to join the veterinary agreement, based on a proportional share of the relevant agencies that administer the bloc’s border checks on plant and animal imports, plus an extra 4 per cent of that amount as an additional “participation fee”.

The draft text, which is subject to negotiation with the British government, also requires the UK to “dynamically align [with] and simultaneously apply” any rules governing animal and plant products that are introduced by EU lawmakers in Brussels.

Nick Thomas-Symonds, Starmer’s European relations minister, has said that legislation to enable dynamic alignment should be in place by the end of this year, with the deal operational by early to mid 2027.

However, both Reform UK and the Conservatives have promised to revoke such a deal, arguing that it diluted British legal independence and betrayed a vital part of honouring the result of the 2016 vote to leave the EU.

Reform UK told the FT that the party would reverse the SPS deal that Starmer was negotiating with the EU if they won power.

Speaking in London on Friday, Farage accused Starmer of “doing his best to give away our parliamentary sovereignty, to give away our rights as voters”.

Kemi Badenoch, Conservative leader, has promised to reverse Starmer’s “terrible deal”, saying she could not accept any agreement with Brussels that involved Britain being subject to rulings by the European Court of Justice.

The European Commission said it “remains fully committed to the implementation of the actions agreed with the United Kingdom at the Summit in May 2025.”

UK government officials said it was standard for agreements to have contingencies for termination and they would apply equally to both parties.

A senior Labour official said it was ironic that both Reform and the Conservatives, which styled themselves as parties of free markets, were promising to restore trade barriers if they won the next election.

“Nigel Farage is going to go into the next election saying he wants to bring back red tape, mountains of paperwork, and a greater bureaucratic burden,” they added