The UK has announced a wide-reaching agreement with the European Union, aimed at boosting the economy, simplifying trade, and enhancing cooperation across several key sectors. Here is a breakdown of the changes.

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1. Economic recovery and growth

The government says that at the heart of the new agreement is a drive to support British businesses and households. The UK economy has faced significant headwinds since Brexit, particularly in sectors reliant on EU trade. Agrifood exports dropped by 21% and imports by 7% following the UK's departure from the EU. The new agreement tackles these issues head-on, reducing trade barriers and regulatory burdens, which in turn could do the following:

• Increase market access for British goods (including items like raw burgers and sausages, previously banned post-Brexit).
• Lower food prices for consumers.
• Improve supply chain efficiency at borders.
• Add nearly £9 billion to the UK economy by 2040.
  
  

This move also follows recent trade discussions with the US and India, indicating a broader government strategy to reinvigorate global trade links.

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2. Reducing red tape: SPS and border efficiency

One of the major outcomes is the new sanitary and phytosanitary (SPS) agreement. It removes many of the routine checks on animal and plant products, which had previously led to long border delays and higher costs for exporters.

For British food producers, especially those operating in Northern Ireland or exporting perishable goods, this deal could mean faster transport, fewer compliance costs, and improved market competitiveness.

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3. Energy, carbon, and steel: avoiding EU penalties

From 2026, the EU plans to introduce a carbon border tax that would have cost UK businesses an estimated £800 million annually. This agreement sidesteps that outcome by linking the UK’s and EU’s emissions trading systems, allowing businesses to trade carbon credits across borders and strengthening the UK’s energy security.

The deal also protects UK steel exports from EU tariffs through a bespoke arrangement expected to save the industry £25 million per year. These provisions are especially critical in helping UK manufacturing sectors remain viable and globally competitive.

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4. Defence and security: renewed collaboration

The UK and EU have formalised a defence and security pact, ensuring structured dialogue on foreign policy and coordinated efforts in areas like sanctions and military mobility. The UK will also participate in the EU’s PESCO military project and gain access to a €150bn EU defence fund, creating opportunities for UK defence firms.

Additionally, cooperation on criminal justice data is expanding, with potential access to EU facial recognition databases a move expected to enhance law enforcement capabilities.

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5. Travel, youth mobility, and pet passports

British holidaymakers and young professionals also stand to benefit. The deal proposes:

• Wider access to eGates at EU airports, reducing queues and delays.
• Easier pet travel through a new passport system.
• Potential re-entry into Erasmus+, offering students the chance to study or intern abroad.
• Discussions around a youth mobility scheme, modelled on existing arrangements with countries like Australia, to allow capped and time-limited work/travel opportunities for 18–35-year-olds.
  
  

6. Fishing and farming: strategic trade-offs

To secure reduced checks on food exports, the UK agreed to maintain the status quo in fishing access, allowing EU vessels continued access to UK waters until 2038. While some may view this as a compromise, it unlocks considerable benefits for UK agricultural exporters by facilitating smoother trade into EU markets.

A £360 million investment fund has also been promised to support innovation and growth in the UK’s fishing and coastal industries.

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7. Legal oversight and autonomy

While the UK will need to align with certain EU standards to maintain market access, particularly in food and emissions, there is flexibility built into the agreement. The UK retains the right to diverge, provided it does not disrupt EU trade, and disputes will be overseen by the European Court of Justice only in limited technical circumstances.

This new UK-EU agreement is not a return to pre-Brexit conditions, but it does represent a practical recalibration. By balancing economic incentives with regulatory flexibility, the UK government is attempting to deliver tangible benefits for businesses, workers, and consumers while easing some of the most persistent post-Brexit trade headaches.

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Should you have any queries regarding the above information or if you require assistance with your corporate, employment or immigration matter, please get in touch with a legal professional at Hudson McKenzie via email at londoninfo@hudsonmckenzie.com or by telephone +44(0) 20 3318 5794.

The information provided does not amount to legal advice.

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