What’s in the New UK-EU ‘Trade Deal’? 

At a summit in London on 19 May, representatives of the UK government and the European Union (EU) took the first steps towards deepening their post-Brexit partnership, agreeing a new agenda for bilateral cooperation. Prime Minister Sir Keir Starmer’s European ‘reset’ marks a recalibration of the UK’s relationship with the EU. While ruling out rejoining the single market or customs union, the UK government is nevertheless signalling a closer approach to economic and trade relations with Brussels.

The agreement, titled a “common understanding,” outlines a series of initiatives designed to enhance cooperation in trade, security, migration and energy policy. The document provides broad policy commitments and is not a legal text, so much of the granular detail is yet to come – but here’s what we know so far.

A Common Sanitary and Phytosanitary Area

As part of efforts to ease friction in agri-food trade, the EU and UK have stated that they will work towards establishing a common Sanitary and Phytosanitary (SPS) area, the aim of which is to significantly reduce or eliminate the need for routine checks and certification requirements on the movement of most agri-food goods between Great Britain and the EU. This agreement could represent a step forward in simplifying post-Brexit trade in food and animal products, which has been hampered by border delays and increased checks.

The common area would be established by the UK dynamically aligning with EU SPS rules. The agreement will be enforced via a governance mechanism and will be subject to the jurisdiction of the Court of Justice of the European Union for questions of European law. Both sides would retain the autonomy to set their own regulations, with the UK able to input as a third country into EU policymaking in this area. The UK also retains the right to take action to manage its own biosecurity risks.

While the agreement is primarily aimed at facilitating GB–EU trade, it is also expected to ease the movement of goods from Great Britain to Northern Ireland, building on the recent Windsor Framework and potentially reducing the need for internal UK border checks. However, the exact impact on GB-NI trade will not be known until the details of the common SPS area have been agreed by the parties.  

Energy Cooperation

The European Union and the United Kingdom have signalled their shared ambition to link their Emissions Trading Systems (ETS) — a move that the UK government hopes will create a more integrated carbon market and promote investment certainty, while supporting the decarbonisation goals of both geographies. When taken together with the SPS scheme, the government estimates that these measures could be worth up to £9bn per year for the UK economy.

By linking the UK and EU ETS, businesses may be able to surrender an allowance purchased in one jurisdiction in the other, converging the price of carbon in the EU and UK and improving the liquidity of purchased ETS allowances. However, perhaps one of the most noteworthy impacts of ETS linkage would be on the application of Carbon Border Adjustment Mechanisms (CBAM) in both the UK and the EU.

A CBAM introduces a charge on imports of certain carbon-intensive goods based on their embedded emissions. The EU’s CBAM will be fully implemented on 1 January 2026 – and the UK is due to introduce its own CBAM a year later. ETS linkage would exempt UK-originated CBAM goods from the scope of EU CBAM and vice versa. Crucially, this would avoid both the direct financial costs imposed by CBAM (in both the EU and UK) and the considerable reporting obligations required for compliance.

The linked ETS would cover key sectors such as electricity generation, industrial heat generation, industry, domestic and international maritime transport and aviation. There is also potential to expand the agreement to cover additional sectors over time. The system will be governed by a joint oversight framework, with an independent arbitration panel to resolve disputes. As with other parts of the emerging UK–EU framework, the Court of Justice of the European Union would retain a final say over questions of EU law.

People and Mobility

A series of dialogues will be established to improve mobility for business professionals, streamline the recognition of professional qualifications and ease temporary stays under the Trade and Cooperation Agreement. However, other than an intent to have further dialogue no detail was provided on how this would be achieved or the exact details of what would be pursued.

The UK and EU also signalled their intent to improve mobility for young people. Discussions will begin on a youth mobility scheme, potentially covering work, study, volunteering, au-pairing and tourism. This is a significant movement in the UK position, with both the previous and current government having already rejected such a scheme. The UK government has stressed that such a “scheme will be time limited, on terms to be mutually agreed, and that the overall number of participants must be acceptable to both sides”.

Efforts are also underway to facilitate the UK’s association with Erasmus+ (which offers training and education placements throughout the EU), ensuring a fair financial and benefit-sharing framework. Additional commitments include supporting travel, cultural exchanges and potentially expanding the use of eGates for smoother border experiences for UK passport holders.

One sector which has struggled with the transition from EU membership to trading under the EU-UK Trade and Cooperation Agreement has been travelling artists. Touring artists now face significant hurdles, including visa requirements, carnet costs for equipment transport, and complex, country-specific paperwork. These factors are potentially limiting their ability to tour in both the EU and the UK. While the government had previously promised in its manifesto to “help our touring artists”, there was no specific relief for the sector in this agreement, other than a reference to “continue their efforts to support travel and cultural exchange”.

Security

Another key outcome from the summit was the signing of a dedicated EU–UK Security and Defence Partnership, which establishes a structured dialogue and cooperation on mutual priorities such as supporting Ukraine, enhancing resilience against hybrid threats, improving cyber security and crisis management efforts. The two sides also committed to closer cooperation on maritime security, including cyber threats to shipping, autonomous vessel security and accident-reporting protocols.

The defence partnership comes alongside a commitment to “swiftly explore any possibilities for mutually beneficial enhanced cooperation created by the SAFE [Security Action for Europe]  instrument”. However, there is no commitment within the agreement to the specific level of access that UK companies will have to the scheme, meaning that businesses will still face some uncertainty over the size of the market opportunity.

Other aspects of cooperation

Beyond the high-profile aspects, the UK-EU common understanding also includes commitments to deepen cooperation in areas such as competition regulation, health security, judicial co-operation, irregular migration and research. It outlines a more structured approach to engagement, with regular meetings and a clearer framework for resolving disputes and managing future changes. These measures are designed to improve day-to-day interactions and create a more predictable environment for business and policymakers.

What should businesses be doing now?

The UK-EU “common understanding” is not a full treaty revision, but it marks a meaningful step towards a closer relationship. The practical implications will take time to unfold, but as the details emerge, businesses and organisations should begin assessing how this reset could help them. Food and drink businesses, alongside heavy manufacturing have the most to gain, whilst other businesses should monitor the results of the government’s other dialogues. For support in interpreting the changes and what they could mean for your operations, Deloitte’s specialists are on hand to help.