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The UK government has expressed apprehensions regarding the European Union’s forthcoming “Made in Europe” industrial strategy, which aims to prioritise European-manufactured products in key sectors. Nick Thomas-Symonds, the UK minister for EU relations, warned that such measures could disrupt existing supply chains, escalate costs, and create unnecessary trade barriers between the UK and EU member states, particularly in light of the current economic climate.
EU’s Legislative Push for Local Production
The European Commission is poised to unveil a legislative proposal that mandates the prioritisation of European-made products in public procurement and consumer initiatives. This initiative is part of a broader effort to reduce reliance on foreign imports and stimulate local production in vital sectors amid growing geopolitical uncertainties.
At an economic forum in Madrid, Thomas-Symonds articulated his concerns: “If you implement stringent preference requirements, you risk affecting our deeply integrated supply chains, potentially leading to unnecessary trade barriers in crucial UK-EU industries and driving up costs.” He specifically highlighted the implications for UK-Spain supply chains, emphasising the interconnectedness of these economies.
Strengthening UK-EU Relations Amidst Challenges
Thomas-Symonds’s remarks come at a time when the UK government, under Keir Starmer’s leadership, is actively seeking to enhance diplomatic and economic relationships with the EU. Since the announcement of the “reset” deal last May, there has been a concerted effort to improve ties with Britain’s largest trading partner. Recently, Starmer has indicated a willingness to explore sector-specific agreements that could provide deeper access to the single market, although such proposals are likely to face criticism from opposition parties.
EU leaders convened in Belgium earlier this month, where they agreed to advance a “Buy European” policy aimed at bolstering the continent’s economic resilience in the face of geopolitical challenges. During the summit, leaders identified key sectors—including defence, space, clean technology, quantum technology, artificial intelligence, and payment systems—as areas requiring protection and enhancement.
Addressing Competitiveness Concerns
The EU’s renewed focus on regional competitiveness has been driven in part by the fallout from the loss of Russian gas supplies in 2022, which not only raised energy costs but also highlighted vulnerabilities in the bloc’s economic structure. With rising regulatory demands and a decline in investment, EU member states are keen to enhance their competitive stance relative to the US and China, particularly given the latter’s heavy subsidies to their manufacturing sectors.
The draft “Made in Europe” proposal is set to encompass EU member states as well as members of the European Economic Area, including Iceland, Norway, and Liechtenstein. However, the UK is notably excluded, although the EU has suggested that “trusted partners” might be included in the future.
France has long advocated for the “Buy European” initiative, though it has faced criticism from other member states like Italy and Germany. Both nations have expressed concerns that overly stringent rules could stifle their automotive industries, which rely on global manufacturing networks. German Chancellor Friedrich Merz and Italian Prime Minister Giorgia Meloni have recently called for a more deregulated approach to bolster competitiveness.
The European Commission is anticipated to release its Industrial Accelerator Act later this month, which will likely establish targets for European content in strategic products, including solar panels and electric vehicles.
Why it Matters
The implications of the EU’s “Made in Europe” strategy extend beyond mere trade policy; they touch upon the very fabric of UK-EU relations and the future of economic collaboration. As the UK navigates its post-Brexit landscape, maintaining fluid trade with the EU is vital for both economic growth and stability. Should the proposed legislation materialise into strict requirements, it could exacerbate existing tensions, leading to increased costs for consumers and businesses on both sides of the Channel. The outcome of this strategy will not only shape the future of European industry but will also set the tone for UK-EU relations in an era defined by uncertainty and change.
