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Peter Kyle, UK business secretary, has said it would be “crazy” not to consider forging a new customs union with the EU, as Britain braces for a possible new trade clash with the US.
Kyle’s comments at the World Economic Forum came in contrast with his assertion in a Financial Times interview this week that it would be “foolish” to embrace the “utopian” idea of joining a European customs union.
The business secretary’s allies denied Kyle was contradicting himself, arguing that while a discussion on the customs union was inevitable, it was not likely to happen any time soon and it would be complex to achieve.
Opposition parties claimed Kyle’s comments showed the government was in disarray over the speed at which Britain should reintegrate with the EU, as the country approaches the 10th anniversary of the 2016 Brexit vote.
Sir Keir Starmer, prime minister, and Rachel Reeves, chancellor, have both ruled out joining a customs union, noting it would mean unpicking recent trade deals with countries including India, South Korea and the US.
But the issue has forced its way up the political agenda, with Wes Streeting, health secretary and a potential leadership rival to Starmer, talking up the benefits of a customs union. David Lammy, deputy prime minister, has made a similar point.
US President Donald Trump’s threat of an additional 10 per cent tariff on British exports from the start of February has also reignited interest in the best way to remove post-Brexit barriers to trade.
Kyle told CNBC in Davos on Wednesday: “When it comes to the customs union, we need to be having these conversations as a country about where is the best anchor, what is the best opportunities for Britain’s economy post-Brexit.
“Now, of course, it would be crazy not to engage with the prospect of a customs union.”
But Kyle said such an idea would not help in the short term. “A customs union is something we need to engage with but let’s be clear, it took Turkey 20 years to join the customs union,” he said.
“It took four years for us to leave the customs union. I am focusing on what it takes to get growth into the economy now.”
Al Pinkerton, Liberal Democrat EU spokesperson, said: “Peter Kyle hasn’t just contradicted his cabinet colleagues, he’s contradicted himself just 24 hours ago.”
Kyle this week said of the pro-EU centrist party: “When it comes to a customs union, I understand why Lib Dem utopianism is so seductive.”
“I think at the moment it would be foolish to slip towards what would be simple solutions.”
Meanwhile, Reeves said in Davos that the government was focusing on delivering a “reset” agreement with the EU that would remove barriers in areas such as trade in foodstuffs and energy.
One EU ambassador to London said: “The Labour government is certainly warming up to the EU. In the last couple of months we have seen a 180-degree turn from them compared to when Starmer took office.”