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Shortly after being elected, the Starmer Government proposed that the UK should dynamically align with the EU’s food and agricultural regulations. This wasn’t in their manifesto, but they decided to do it anyway, claiming it would boost UK exports in food and agriculture: an area of the economy constrained by the UK’s small landmass, cold climate, and relatively large population. But, hey ho.

Starmer has now gone, and so has his European Union Relations Minister, Nick Thomas Symonds, the man behind the idiotically badly thought-through UK Reset with the EU. But what of the Reset itself?

At the moment, it is not clear whether the new Burnham Government intends to continue with the Reset. Although government publications about the Reset now have a stamp proclaiming that:

These notices usually appear after a change of government to one with a new plan, so hopefully this is also true of the Reset. However, in case Burnham does intend to continue with it, the article below is a list of some of the things that are wrong with the agrifood section of the Reset, which covers:

• animal and plant health,

• live animal welfare,

• animal transport regulations,

• food safety,

• food production regulations,

• distribution and consumption of agri-food products,

• pesticide regulations,

• consumer protection rules regarding food,

• food contact materials,

• organic production rules and labelling, as well as

• marketing standards applicable to agri-food products.^[1]

This is not an exhaustive list; DEFRA believes 75 agri-food sectors will be covered by the Reset. Each sector contains multiple new EU regulations introduced after the UK left the EU. So while the UK has not altered many of the regulations it followed as an EU member, the EU has introduced thousands of new regulations and altered many of the old ones that we continue to use. Under the Reset, the EU’s regulations will apply to all UK agri-food businesses, not just those that trade with the EU. So all farmers and food manufacturers will need to alter their products and processes to comply. This will be a very expensive process for most of them, although not for the government ministers who came up with the plan.

The aim of the agri-food section of the Reset is, according to the European Commission, so that ‘the vast majority of movements of animals, animal products, plants, and plant products between Great Britain and the Union being undertaken without the certificates or controls that are currently required or expected.’^[2] However, I suspect the real aim is to reverse the increase in British food imports from non-EU countries, up by 27% since 2019 according to the ONS, using CVM to account for inflation.^[3]

However, dynamic alignment with the EU’s SPS area is unnecessary and will not increase UK food exports; it will just be another burden on UK taxpayers, and potentially very dangerous for the UK’s plant and livestock farming for the following reasons:

1. Background and context of the UK proposal to align dynamically with EU food and agriculture legislation.

SPS alignment is unnecessary because the UK’s entire Food and live animal exports to the EU were only £12 billion in 2025.^[4] This was just 0.4% of the UK’s GDP of £3,037 billion in 2025^[5] and only 1.3% of total UK exports.

Most UK food production is consumed domestically, and an additional 35% of the food consumed in the UK has to be imported.^[6] The UK does not even fully supply the foods that can be grown in the UK climate. Imports of ‘indigenous foods’ vary from 20% to 25% depending on domestic yields. Consequently, the UK does not have much surplus food to export to the EU; cutting red tape won’t change this.

The UK is a major importer of food, and the EU is one of its major suppliers. This has continued since Brexit without the need for regulatory alignment. Consequently, the supposed benefits of the Reset will be very small. The UK does not have the capacity to increase its food production in order to reap any benefits that certificate-free trade could produce.

All that regulatory alignment would achieve is to shift the private costs of exporters onto the public purse while forcing all non-exporting agri-food businesses to change their production methods, processes and packaging to meet EU regulations.

2. Limited potential savings from dynamic alignment

The UK’s Reset negotiator, Nick Thomas Symonds MP, has claimed that UK agrifood exporters to the EU have spent just £210 million on something he called a ‘paperwork tax’ over the three years from 2023 to 2025. This is only £70 million annually and a tiny fraction, just 0.6%, of the UK’s annual agrifood exports, which are in turn a tiny fraction of the UK’s total exports, as mentioned earlier. Dynamic alignment with the EU’s SPS regulations will only reduce exporters’ ‘paperwork tax’ by a small amount.^[7] But UK taxpayers will be asked to pay 10 times this amount for access to the EU SPS area.

Not that SPS health certificates are the only cost of exporting food to the EU: UK exporters will still have to complete: customs declarations; rules of origin compliance to qualify for zero tariffs under the Trade and Cooperation Agreement; VAT obligations and potentially register for EU VAT and file EU VAT returns on Business to Consumer sales; comply with EU safety, labelling, and packaging rules including EU waste rules; complete EU Economic Operations Registration and identification (EORI) forms; EU Safety and Security declarations, packing lists and transport documents; and submit to EU customs risk checks, anti-fraud checks, security screening and weight/volume inspections as well as pay the usual haulage costs, insurance and cold chain energy costs. All those other costs will still exist, even under the proposed EU SPS Reset.

The primary difference will be that the small savings will benefit private companies trading with the EU while the high costs will be paid by UK taxpayers who do not profit from trading with the EU.

3. Paying for EU dynamic alignment

Dynamic alignment will not be free. The UK will be asked to contribute to the EU’s Cohesion Fund as the EEA and EFTA countries do in return for access to the EU market.

During the 2021-2028 EU budget period, Norway will contribute €3.17 billion to the EU’s Cohesion Fund for access to the EU SPS area. This is equivalent to approximately €453 million (£385 million) per year. Norway also contributes between €400 million and €500 million annually to other EU programs. Its total annual contribution to the EU is between €850 million and €950 million. Norway exports approximately €7.4 billion in agri-food goods to the EU, predominantly seafood, and imports agri-food worth around €6 billion from the EU, which accounts for about 64% of Norway’s total agricultural imports. Norway does not pay to access the EU’s ETS and CBAM, as it has been a full participant in the EU ETS scheme since 2008.

However, the UK could be asked to pay much more than Norway for SPS access, as the UK exports more to the EU: in 2024, UK SITC 0 Food and Live Animal exports to the EU, measured in current prices, were £11.35 billion, equivalent to about €12.84 billion and 74% more than Norwegian agri-food exports. Therefore, the EU would likely require an annual payment of £690 million to access its SPS system. Dwarfing the £70 million potential gains. ^[8]

4. Potential gains for EU companies not UK farmers

In total, the UK only exported food and live animals worth £12.1 billion to the EU in 2025.^[9] Removing SPS checks is unlikely to increase UK food exports at all, let alone boost GDP by ‘up to’ £5 billion a year as some vested interest groups have apparently claimed.^[10]

The UK doesn’t have the capacity to increase its agri-food production by this amount and didn’t export anywhere near that amount of food when it was a full EU member with ‘certificate-free’ trade. In 2020, the last year of the UK EU Transition Agreement, UK food and live animal exports to the EU were only £10.8 billion, in 2020 prices, despite full EU access, and only £12.9 billion in CVM-adjusted prices.

At least Dunbia, the meat processor extoling the Reset in government publications, is honest enough to explain that the Reset ‘should result in potential cost savings for our businesses’. But the publication doesn’t mention that UK taxpayers will be subsidising their cost savings by paying 10 times this amount to the EU’s Cohesion funds. Nor do Government publications mention that Dunbia is a Northern Ireland meat processor, fully owned by the Irish meat processor Dawn Meats. Ireland supplies about 70% of British meat imports. So the Reset, purporting to help British agricultural EXPORTERS, is actually helping EU companies export to Britain.

It is also worth noting that the Irish meat lobby group, Meat Industry Ireland, is upset that its share of UK meat imports has fallen from 80% before Brexit to just 67% in 2025.^[11] They blame this on the post-Brexit UK trade deals with Australia and New Zealand. But the chart below from Ireland’s Bord Bia makes it obvious that the increase in the price of meat imports from Ireland has nothing to do with the cost of red tape or veterinary checks. And the Reset will not fix this. But the Reset could force the UK to buy more expensive Irish meat rather than import cheaper meat from Australia, New Zealand, Canada, Mexico or Chile. The EU would just need to change its (precautionary principle-based) food standards to achieve this.

5. The UK’s booming Agtech sector could disappear under EU regulations

By being outside the EU and its regulations, the UK has developed a growing agricultural technology industry. There are almost 2,500 companies employing over 56,000 people in the UK Agtech sector. The sector is worth roughly £28.4 billion, which is more than double the UK’s total Food and live animal exports to the EU. The Agtech sector covers farming efficiency, precision breeding, sustainability and biotechnology.

The UK’s Agtech industry has pioneered innovations in: climate-resilient crops; fungal-based biopesticides to suppress aphids; UK-climate-tolerant rubber plants; plants containing Omega-3 fatty acids; root-mist nutrient delivery systems; robotic harvesting of soft fruits; and pollinator-tracking sensors.^[13]

The UK has the potential to develop new crops and export them around the world, but if we adopt dynamic alignment with the EU, we may find that UK farmers are prevented from benefiting from these developments. The CJEU found in July 2018 that genetically edited plants and animals should be treated as GMOs.^[12] Defra agrees that GMOs will be in scope of the Reset’s SPS alignment.

6. No influence in EU decisions

The European Commission, Council Decision, Register of Commission Documents - COM(2025)408, main document, Section 5.1 paragraph 2, clearly states that the Reset will not give the UK the right to participate in the EU’s decision-making, while paragraph 3 states that the agreement provides an obligation for the UK to dynamically align to EU legislation and that regulation should be applied simultaneously with the EU.

We have seen that even as a member of the EU, the UK had little influence in the Union’s agricultural decision-making. For example, the EU restricted UK beef exports for about 10 years after the BSE crisis, even though the UK was a member of the EU; it had no ability to influence EU SPS regulations.^[14]

Dynamic alignment means all UK Food and Agriculture regulations will be EU law, and therefore all of them will fall under the ECJ’s jurisdiction. This is clearly explained in the EU’s Council Decisions, Register of Commission Documents - COM(2025)408, main Document, Section 5.1, paragraph 5:

‘the Court of Justice of the European Union is the ultimate authority for all questions of European Union law, with possibilities for appropriate measures to protect the [European] Union interests in case of non-compliance with the agreements.’

The Reset requires all UK agri-food companies to follow the EU’s regulations immediately, whether or not they export to the EU. The EU has made this clear in Section 5.1, paragraphs 3 and 4, which are reproduced below;

‘3. Both agreements should provide for an obligation for the United Kingdom to dynamically align to the relevant [European] Union legislation. The principle of dynamic alignment should ensure that identical rules within the scope of the agreement are simultaneously applied.’ [my emphasis]

‘4. Both agreements should ensure uniform interpretation and application of [European] Union law on the basis of the case-law of the Court of Justice of the European Union; in particular, the interpretation given to the applicable rules within the Union should also apply in the context of the relations between the Parties.’ ^[15] [my emphasis]

7. Dynamic Alignment means identical rules applied simultaneously

It is impossible to misunderstand what the EU means by dynamic alignment, yet UK politicians are trying to convince themselves that they will be able to influence EU decision-making, pick and choose the agri-food regulation they want to follow and ignore those that don’t suit the UK climate, UK agriculture, or UK food manufacturing.

The Starmer Government also overlooked the most important detail – most UK food and agricultural companies are domestically focused. Their primary customers are British citizens, not EU ones, but they will still have to follow EU laws. This also applies to companies exporting agri-foods to the US, China, the Middle East or any other country that does not follow EU regulations. Consequently, the Reset could reduce the UK’s growing exports to non-EU markets rather than increase UK exports to the EU. UK exports of Food and Live Animals to non-EU countries increased by 34% between 2019 and 2025, while exports to the EU increased by only 12%, both measured in current prices.

So I reiterate, Dynamic alignment means that the UK follows EU laws identically and immediately. The Reset will force changes to everything from pesticide production and use, to food colouring, packaging materials and nutritional information; all based on the EU’s precautionary principle rather than risk-based scientific methods. The Reset will even alter UK animal welfare regulations and live animal transport rules.

8. The disease risks associated with a common SPS Area are real

If the Reset continues and achieves its aims of removing health certificates, border controls, and creating a common SPS area between Great Britain and the continental EU, it would be extremely dangerous for UK animal-based agriculture.

The EU does not have an exemplary record of limiting animal and plant diseases from crossing its borders. For example: In January 2025, a Foot and Mouth Disease outbreak started in Germany, by February it was in Hungary and by March it was in Slovakia – despite EU regulations this disease easily spread across EU borders affecting more animals as it spread: the first outbreak in Brandenburg, Germany, affected 14 animals; the next outbreak in Kisbajcs, Hungary, affected 1,400 dairy cattle; a second outbreak in Hungary, affected 3000 animals; then Gyor-Sopron, Hungary, another 1000 cattle; a second outbreak in Gyor-Sopron, Hungary, affected 2,500 animals; Slovakia’s multiple outbreaks involved approximately 10,000 animals on farms in Bratislavsky, Trnavsky, and Nitriansky.^[16] Foot and Mouth Disease reached Cyprus in February 2026 and reached Greece in March 2026.^[17] Why would we want this in the UK?

The UK has a climate where Foot and Mouth Disease thrives in the type of animals most commonly kept on UK farms. The last outbreak of Foot and Mouth Disease in the UK was in 2007, almost 20 years ago. It infected 60 animals and was over within 3 months. The best way to avoid new FMD outbreaks is to prevent trade with countries that have or could have FMD. This is why DEFRA’s restrictions on meat and dairy imports from Germany, Hungary and Slovakia in 2025, which all had outbreaks, also applied to Austria, which did not have FMD but has ‘certificate-free’ borders with the other three countries. Similarly, Defra’s ban on non-commercial imports extends to EFTA countries, Greenland, and the Faroe Islands because they have free trade with the EU.

The UK does not have similar restrictions on its non-EU agricultural trading partners, which Defra does not list as having FMD.^[2] Both Australia and New Zealand, which export meat and dairy products to the UK, are FMD-Free. North America, Central America and the Caribbean are officially recognised as FMD-free by the World Organisation for Animal Health (WOAH). There have been no cases of FMD in the Mercosur countries since 2013, when Venezuela had an outbreak. As of 2020, 98.6% of South America’s cattle population was officially recognised as FMD-free by the WOAH due to a vaccination program. The region is working towards full eradication. The only CPTPP country to have had a recent FMD outbreak is Malaysia, but the UK has never imported any dairy products or any beef, pork or sheep meat from Malaysia. Nor are we proposing to drop our border controls with them.

The EU’s disease problems are not limited to foot and mouth disease. It also has current and ongoing cases of African Swine Fever in pigs, Lumpy Skin Disease in cattle and Peste des Petits Ruminants in sheep.

The UK has never had an outbreak of African Swine Fever (ASF). However, ASF outbreaks have been ongoing in the EU since 2017, when they first appeared in domestic pigs in Romania. Romania has had 72 outbreaks so far this year in domestic pigs, following 478 outbreaks in 2025, 213 in 2024, and 533 in 2023. Other EU countries with ASF outbreaks in domestic pigs since 2023 include Bulgaria, Croatia, Estonia, Germany, Greece, Italy, Latvia, and Poland. EU countries with outbreaks in their Wild boar populations are Bulgaria, Croatia, the Czech Republic, Estonia, Germany, Hungary, Italy, Latvia, Lithuania, Poland, Romania, Spain and Sweden.

The WOAH and Defra in the UK have been monitoring the EU’s outbreak of African Swine Fever.^[18] The WOAH records the number of outbreaks but not the number of animals infected. The UK’s National Pig Association reports that an outbreak in Estonia in 2025 occurred on the country’s largest pig farm and resulted in the culling of 28,500 pigs. According to WOAH, there have been no months without outbreaks in either domestic pigs or wild boar in Europe between January 2023 and April 2026.

Only 2 CPTPP countries have had cases of ASF during the last 5 years. Malaysia experienced an outbreak in 2021, which it controlled through quarantine, culling, and tighter biosecurity measures. Vietnam is the only CPTPP country to have had an ASF outbreak during the last 5 years that was anywhere close to those in the EU.

Fears of diseased meat entering the UK food supply are not exaggerated. In February 2025, the BBC reported that Dover Port Health Authority had confiscated 100 tonnes of diseased meat in 868 separate consignments.^[19] This was during a period when the UK required any meat, dairy, fish or eggs from the EU to have full third-country SPS paperwork: Export Health Certificates; Customs Declarations; Pre-notification on the UK’s Import of Products, Animals, Food and Feed Systems (IPAFFS); and routine SPS border checks by Port Health Authorities of documents, identity and physical checks. Had the UK had dynamic alignment and certificate-free trade with the EU, much of this meat would have entered the UK. Without the current level of checks, this diseased meat would have entered the UK food chain.

Adopting the EU’s SPS regulations and removing our border controls could lead to our non-EU trading partners imposing similar precautionary restrictions on UK agricultural products. Canada currently restricts imports of dairy and beef products from France, Italy and Switzerland to prevent Lumpy Skin Disease getting into Canadian dairy cattle, even though Switzerland has not had an outbreak of LSD. It shares borders with France and Italy.

9. UK and EU regulatory divergence in agri-food

Since leaving the EU, Great Britain has predominantly changed animal welfare rules, such as the transport of live animals for slaughter and fattening, and it has banned the dredging for sand eels in English waters. The EU has also changed its agricultural rules but with an emphasis on crop production rather than animal welfare. For example: The EU has lowered its Maximum Residue Limits for pesticides for both domestic production and imported produce.

The Reset will force British farmers to align with EU rules on: active substances authorisation, pesticide residue levels, and the sale and marketing of pesticides. This will have implications for farmers and growers, agrochemical manufacturers, distributors, food retailers and other businesses using pesticides. This will prevent the UK from importing crops and cereals from many other countries that have pesticide regulations based on risk-based scientific assessment. The EU’s pesticide regulations are based on the hazard-based precautionary principle rather than the risk-based scientific assessment used by the majority of the developed world, including Great Britain.

The Reset will require the UK to change its pesticide regulations immediately whenever the EU does. So far in 2026, the EU has made 20 changes to its Plant Protection List.^[20] In 2025, the EU made 38 changes to its plant protection product lists, while in 2024 it made 78 changes.^[21] Since leaving the EU, Great Britain has not followed the EU’s many MRL changes but has instead aligned 764 MRLs with international standards known as Codex Alimentarius.

Since leaving the EU, Britain has also dropped the EU’s “3 crop rule”, crop diversification requirement under Regulation (EU) No 1307/2013, which applied to farms with more than 30 hectares of arable land and required at least three crops, with a 75% limit on the share of the main crop. This rule prevented Britain’s large farms from maximising their returns by preventing them from using all of their land to grow the most profitable crops. The Reset would force the UK to follow the EU’s rules again. The EU has retained this requirement but made it slightly more flexible by including crop rotation and mixed planting.

10. Food contact material means packaging

Defra’s publication on the UK regulations to be impacted by the Reset clearly states that any materials that come into contact with agri-food products must comply with EU requirements for packaging materials.^[22] The EU has recently banned or limited the use of several types of PFAS plastics commonly used to package takeaway food in the UK. The EU also has different food standards and food marketing requirements. The Reset will force UK food producers and manufacturers to change their packaging for wholesale and retail agri-foods and may require some food manufacturers to change their utensils.

In the DEFRA publication, UK-EU SPS Agreement - Legislation in scope - GOV.UK, packaging is covered in three sections:

a. Food Contact materials, which means both wholesale and retail packaging, as well as vessels used in food processing and manufacturing. Defra explains this in the description: ‘Alignment with EU rules on plastics, ceramics and other food contact materials will affect packaging manufacturers, food processors, laboratories, retailers and the NHS.’

b. Packaging will also be affected under the section: General Food Law and Consumer Information. This will affect the required information on retail packaging.

c. Food composition and labelling standards on retail packaging will be affected under the section: Marketing Standards for Specific Foods.

British food and drink manufacturers have recently had to change their packaging to conform with UK recycling regulations and to add ‘Not for EU’ labels. Forcing them to change again to conform with EU regulations will be a very expensive exercise, especially for small and medium-sized manufacturers who are less likely to export goods to the EU.

Conclusion

In a recent interview with the BBC, Andy Burnham said he would always put UK interests first; well, I have a list for him of how he can do this, but close to the top of the list would be to abandon the Reset. UK agricultural trade is doing fine without it, and UK taxpayers can’t afford to subsidise private company costs.

^[1] European Commission Council Decision COM(2025) 408 Final, Section 5.1, paragraph 10, (Link to section)

^[2] European Commission Council Decision COM(2025) 408 Final, Section 1.1, paragraph (a), (Link to section)

^[3] ONS, UK trade in goods and services, annual chained volume measures, May 2026 (Link)

^[4] UK trade: goods and services publication tables - Office for National Statistics

^[5] The UK’s GDP was £3,037 billion in 2025.

^[6] AUK-chapter14-20250710.ods, tab 14-3

^[7] EU alignment ‘will not cut trade red tape’, claim experts | News | The Grocer

^[8] Cui Bono, by Catherine McBride.

^[9] ONS UK Trade: Goods and Services publication tables, May 2026, Annual CP, (Link)

^[10] British businesses cheer UK-EU deal to support food trade and profits - GOV.UK

^[11] Irish beef loses UK market share to Australian and Brazilian imports - Agriland.ie

^[12] See case C-528/16, July 2018, Confédération paysanne and Others v Premier ministre and Ministre de l’Agriculture, de l’Agroalimentaire et de la Forêt [2023] EUECJ C-528/16, 62016CJ0528

^[13] Agri-tech in the UK: industry profile | ICAEW

^[14] ec.europa.eu/commission/presscorner/detail/en/ip_06_278, BSE: UK beef embargo to be lifted, 8 March 2006.

^[15] Register of Commission Documents - COM(2025)408 , Main Document, Section 5.1, paragraph 2, paragraph 3, and paragraph 4.

^[16] Source: Foot-and-mouth (FMD) disease outbreaks in Europe – Update – FVE – Federation of Veterinarians of Europe, and Foot-and-mouth disease - Food Safety - European Commission.

^[17] Foot-and-mouth disease European outbreaks | AHDB and Foot-and-mouth disease - Food Safety - European Commission

^[18] African swine fever in Europe

^[19] Dover: Almost 100 tonnes of illegal meat seized at port last year - BBC News

^[20] EU Pesticides Database - MRLs - Latest updates on MRLs

^[21] Yearly review of EU and GB MRL changes in 2025 | COLEAD - COLEAD 2026

^[22] UK-EU SPS Agreement - Legislation in scope - GOV.UK

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The Sunday Times reports that Andy Burnham, soon to be appointed Prime Minister, will be presented with a plan to reinstate the Conservative policy known as ‘Help to Buy’. Or really ‘Help developers to sell’, if we are being honest.

The program was initiated by George Osborne in 2013, the same year he jacked up Stamp Duty Land Tax (SDLT) from Gordon Brown’s top slab rate of 4% for properties over £500,000 to a top ‘slab’ rate of 7%. The following year Osborne replaced SDLT with a marginal system with the top marginal rate of 12% on the value of a property over £1.5 million and 15% on enveloped buildings. Osborne’s SDLT ‘reforms’ didn’t tax the rich as much as he taxed London and the South East, where demand for housing greatly outstripped supply. Any property worth more than £937,500 paid more Stamp Duty under Osborne’s reforms than it did under the previous ‘slab’ system. While people buying cheaper properties paid less stamp duty.

At the same time as he increased the taxes on property purchases, Osborne also introduced a ‘help-to-buy’ scheme which was a boon to commercial house builders, as it was only available for new-build properties. In April 2013, the government agreed to lend buyers an interest-free 20% equity loan on a property for 5 years; the buyer had to pay a 5% deposit and obtain a mortgage for the remaining 75%. For London Property, the government lent up to 40% of the purchase price. The interest-free period only lasted for 5 years; after that, it increased annually by RPI + 1%. When the property was sold, the government took 20% or 40% of the sales price, not the original loan amount.

In general, buying a house in an inflationary economic environment enables homeowners to inflate away their debt. The help-to-buy equity scheme meant the government also benefited from house price inflation, unlike the bank putting up most of the money. So the government had little incentive to control house-price inflation which became rampant due to a decade of ultra-low interest rates. The scheme was sold to voters as ‘help’ for first-time buyers, but it was primarily intended to benefit the commercial house-building firms registered with the scheme. Although the scheme was limited to a maximum property price of £600,000.

In October 2013, Osborne also introduced a mortgage guarantee scheme in which buyers had to put in a 5% deposit, the bank provided a 95% mortgage, and the government guaranteed 15% of the mortgage to the lender. This scheme was open to purchases of existing housing but was also limited to a maximum price of £600,000.

This was a strange scheme to be run by the government because the required increase in deposit rates from 5% before the financial crisis of 2007/8 to 20% afterwards, came from international financial institutions: Basel III and the G20 Financial Stability Board guidance on bank capital requirements. These international organisations increased the risk-weights for high loan-to-value mortgages.

So while UK banks had lost money on their newer mortgages in 2007/8 and needed to rebuild their capital, it was international regulatory pressure and the UK’s Financial Services Authority, part of the Bank of England, that introduced tougher affordability rules and larger deposit requirements for mortgages. In addition, the Bank of England’s stress tests, introduced in 2014, penalised banks with large amounts of high loan-to-value mortgages on their books. So the Bank of England was trying to reduce mortgage risk while the Government was encouraging it by becoming the guarantor of some potentially risky loans.

The schemes ran from April 2013 to May 2023 and helped 387,000 property purchases. However, it also increased demand for properties below £600,000 and increased prices for new-build properties to the £600,000 threshold. It also locked up about £20 billion of government funding in housing equity loans. On the bright side, so far the majority of redemptions have been above the purchase price, although the scheme does encourage successive governments to keep house prices high, at least until all the equity loan properties have been sold and the government has recouped its money.

Stamp Duty Land Tax

But there are other ways that successive governments have made house buying more expensive. For example, the Labour government lowered the nil-rate band for Stamp Duty Land Tax (SDLT) from £250,000 to £125,000 for non-first-time buyers, while for first-time buyers it reduced the nil-rate band from £425,000 to £300,000 and the 5% band from £625,000 to £500,000. So Labour has reduced the maximum SDLT saving for first-time buyers by £3,750 from £8,750 to £5,000, while adding £2,500 to everyone else’s property purchase costs.

But the government has also increased the cost of housing by taxing building materials, increasing planning requirements and the ‘affordable’ housing schemes. Together, these taxes and programs have increase the cost of housing, causing the need for government ‘Help to Buy’ schemes. The government is literally increasing building costs with one hand while planning to hand out discounts and loan guarantees with the other.

1. Emission taxes

Almost all building materials have high carbon emissions during production, even though the housing they provide will last for decades or even centuries. If the government wants to add carbon taxes to the production of essential building materials it should at least consider their longevity and divide their production emissions by the expected life of the product.

Unfortunately, this is not how carbon taxes work and the UK still requires building material producers to buy emission allowances on the ETS market and to pay the Carbon Price Support (CPS) and Climate Change Levy (CCL), and soon importers of building materials will have to pay the Carbon Border Adjustment Mechanism (CBAM) on imported materials. Worse still the UK Government plans to join the EU’s ETS market, which is not only about 20% more expensive than the UK ETS; the EU is reducing its free allowances at a faster pace than the UK.

Cement kilns, steel blast furnaces, brick and roof tile kilns and glass furnaces have to currently pay almost £60 in tax for every tonne of CO₂e they produce under the UK ETS, as well as pay the CCL on electricity and gas of 0.8p per kWh and the CPS on gas used to produce electricity of £18 per tonne of CO₂.

• Steel from a blast furnace produces 1.8 to 2.6 tonnes of CO₂ emissions per tonne of steel produced, which adds carbon taxes of about £110 to £120 per tonne;

• Aluminium production emissions are very high and range from 4 tonnes to 22 tonnes of CO₂ per tonne, depending on the type of electricity used in smelting and casting the aluminium. The global average is about 14.4, which would add between £600 and £900 per tonne to UK production costs, but almost no aluminium is produced in the UK because of these taxes. However, imported aluminium will be charge CBAM taxes from next year;

• Cement from 0.6 to 0.9 tonnes of CO₂ per tonne of Cement so the carbon taxes add about £35 to £52 per tonne;

• Glass manufacturing emissions range from 0.6 to 1.5 tonnes of CO₂ per tonne which adds £35 to £86 in emission taxes;

• Bricks and other ceramics from 0.3 to 0.6 tonnes of CO₂ per tonnes and the various carbon taxes add £17 to £35 per tonne of bricks or roof tiles.

In total, emissions taxes add up to £ 3,000 to the cost of building per typical property unit. This will increase by almost 20% in January if the UK joins the EU ETS market. The table below shows the current UK and EU December Futures price of emissions and exchange rate.

2. Environmental taxes and fuel duties

Besides the emission taxes, there are other environmental taxes such as the aggregates levy of £2/tonne, the landfill tax, and fuel duty for vehicles and machinery. Off-road machinery, such as excavators and cranes, used to be able to use ‘red diesel’ that was taxed at 11.14p per litre rather than 52.95p, but this discount was removed in April 2022. This has increased the site machinery fuel costs by £3 to £5 per square metre of built area.

3. Planning, design requirements and financing costs

Besides the increase in material costs, the government’s planning approval process and design requirements for larger developments have also increased housing costs. Planning approvals can add between £20,000 and £70,000 per home, depending on the size and location of the development.

Developers must produce: Transport assessments, environmental impact assessments, flood risk and drainage reports, archaeology reports, ecology reports, viability assessments, design and access reports, fire strategy plans, and energy and sustainability reports. For a medium-sized scheme, these can add up to £1 million to building costs.

But the highest cost is the financing costs while the planning approval takes place. Major schemes can take two to five years to get approval, during which time the developer has capital tied up in the land and a large negative cash flow paying for consultants to produce multiple reports. This is why major construction projects can run up massive bills before the foundations are dug or a brick has been laid.

The plans of larger developments also have to include two staircases if they are more than 18 metres high. While an important safety feature, this reduces the saleable floor area by about 5%. The requirement for cross-ventilation and dual-aspect units also reduced the number of units in a development. Sunlight and daylight compliance restricts building heights. While accessibility requires step-free access to the main entrance, and M4(2) accessibility requirements include wider corridors, wider doorways, and larger bathrooms, which also reduces the number of units. In London, the GLA requites 90% of units to meet M4(2) requirements; outside London, only 20% to 30% of units need to meet these standards. The GLA also requires 10% of units to meet M4(3) requirements for wheelchair users, which must have lift access, larger rooms, fully accessible bathrooms and kitchens and parking sized for wheelchairs. While this is obviously important for wheelchair users, it both increases the costs and increases the floor area of London developments, reducing the number of units that can be built in a new development. Together both larger apartments and fewer apartments increase the price.

4. Affordable housing discounts

But the highest government-created additional cost for the average property purchaser is the affordable housing requirements under Section 106. This requires 20% to 30% of new houses to be ‘affordable’ outside London, while new developments in London must have 35% to 50% ‘affordable’ units, where ‘affordable’ means they are sold to local authorities or registered providers, such as housing associations, at 50% to 70% of the ‘market value’.

House builders are not charities, so the discounts given to the housing associations or councils must be added to the cost of the other units sold to regular buyers, including first-time buyers receiving government ‘help to buy’.

If the ‘market price’ is £400,000, and the affordable price is 60% of the market price, then a housing association will pay £240,000 for the dwelling, and the £160,000 discount will be added to the cost of the other dwellings in the development. If only 30% of the dwellings have to be ‘affordable’ i.e. sold at a discount to a housing association, then the cost added to the other 70% of units would be £68,571 per dwelling. That is, for the developer to make the same return as he would have made had he sold all of the units at the market price, instead of being forced to sell 30% of them at a 40% discount, he would have to increase the cost of the remaining market-priced units by 17%.

But if the development is in London and 50% of the units have to be sold at 60% of the market value to a housing association, then this will directly add the £160,000 discount to the price of the other so-called ‘market-priced’ units. So a £400,000 unit will cost a regular purchaser £560,000 but a housing association only £240,000. Regular purchasers in London could have to pay a 40% increase above the market price to generously subsidise a housing association’s 40% discount. These ‘discounts’ are not paid by the developers many politicians believe they are targeting but by other purchasers.

Conclusion

If the government really wants to help house buyers, maybe it should remove the taxes, duties, and regulations it has added that have increased the cost of housing, rather than by gimmicks that help developers sell their properties but drive up prices forcing buyers to take out larger mortgages.

It would be both more effective, less risky, and cheaper from a treasury perspective to reduce: the ‘affordable’ discounts given to housing associations: the planning requirements for new housing: the accessibility proportions when less than 2% of the population use wheelchairs and about 25% require M4(2) level accessibility: and the carbon taxes added to building materials that will last for at least the 30 years of the mortgage.

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The Carbon Border Adjustment Mechanism (CBAM) is not about the environment. It is just another tax. This time, it is an additional import tariff based on the Greenhouse Gas (GHG) emissions per unit weight when the item was produced. And unlike regular tariffs, there are no plans to exempt essential imports.

CBAM is an attempt to reverse the UK’s ‘own goal’ of unilaterally applying three carbon taxes to its manufacturers decades ago. Well, not quite unilaterally; the EU also applied one of these carbon taxes, the Emissions Trading Scheme, in 2005. But the UK has two others: the Climate Change Levy, introduced in 2001, and the Carbon Price Support tax, introduced in 2013.

These emissions taxes were UK ‘own goals’ because they drove industry out of the UK to avoid the extra taxes or drove UK industry out of business completely if it could not compete with imported goods made in jurisdictions with no emissions taxes. Some of these jurisdictions also have very few environmental regulations, and most still freely use coal for industrial heat and electricity generation. UK industry could not compete with goods produced using cheap energy and with no carbon taxes or environmental regulations, so it moved its manufacturing out of the UK, effectively exporting UK emissions. The CBAM is meant to reverse this, but it is 25, 21, and 13 years too late.

The government is introducing an import tariff on the GHG emissions of imported Iron and steel, Aluminium, Cement, Fertiliser, and Hydrogen. This is truly a case of closing the stable door after the horse has bolted, as these goods are generally no longer made in the UK or are not made in sufficient quantity to meet UK demand. Worse still, many are key input materials for the UK’s much larger and more important high-end manufacturing industries.

Timing is everything

If there was ever a good time to introduce an emissions tariff on imported goods, it was the same second the emission taxes were introduced on domestic manufacturers. Not 20-plus years afterwards. In today’s world of international trade, open markets and low shipping costs, it was industrially suicidal for the UK to wait until most of its manufacturers of primary base materials had gone out of business or offshored their production before introducing a similar emission tax on imports.

There are other problems with the current CBAM proposal besides the timing: for a start, it will only equalise the ETS payment that would have been charged if the material had been produced in the UK, but not the CPS and CCL costs, or the cost of the many other environmental regulations that UK industries must follow. Secondly, there is also the cost of monitoring and recording all imported CBAM materials, even if only to demonstrate to HMRC that their value is below the £50,000 import threshold, beyond which CBAM must be paid. Thirdly, many industries and products that must pay ETS, CPS, and CCL taxes are not on the CBAM list. These companies will not receive any CBAM protection from their imported rivals, but they may find that their imported input materials are more expensive due to CBAM.

Complex products are too difficult to tax

The Government is not proposing to apply CBAM to complex products as it is too difficult. Complex products have many components, often produced in multiple countries and by various methods, making it difficult, if not impossible, to calculate the end product’s total emissions and to determine whether those emissions occurred in countries with emissions taxes.

But while it may be easier to apply a CBAM to base materials such as iron and steel, aluminium, and fertiliser, the UK has ceased producing many of the goods in these CBAM categories. In the case of fertiliser, the UK has completely ceased producing fertiliser ingredients such as Ammonia and Nitric Acid, as well as complex 2- and 3-ingredient fertilisers, but both the ingredients and the finished products will have CBAM added to their import price. UK aluminium production has dropped to a mere 5% of UK demand, but imported aluminium sheets, tubes, wires, and components will also have CBAM added to their import prices. And UK primary steel production is now less than 2 million tonnes, but imported steel products will have both CBAM and 50% tariffs added to the import price.

There are few remaining competitive domestic producers.

Although the production of these CBAM commodities can emit substantial greenhouse gases, unless there are competitive domestic producers that are subject to the UK’s ETS, there is little point in applying a CBAM to imported materials. Applying a CBAM just increases the costs borne by downstream users of these materials, who will attempt to pass the costs on to their customers if they can.

Unfortunately, for export industries such as the UK’s car manufacturers and aircraft parts manufacturers, passing on the cost of CBAM will be difficult, as they have to compete in international markets with products made in countries without carbon taxes and with cheap coal. However, producers of goods predominantly for the UK domestic market, such as cereal farmers, will have no choice but to pass on the increased cost of fertilisers to their food manufacturing customers, who will in turn pass it on to consumers.

So a tariff designed to reverse a market distortion created by carbon taxes will itself create another market distortion, further driving up manufacturing costs in the UK and pushing more manufacturers out of the UK or out of business. Maybe it is time to consider a new solution for emissions reduction. Maybe we should encourage companies to make their UK facilities more efficient by using tax-deduction carrots rather than emission-tax sticks.

For more information about CBAM, UK deindustrialisation, and alternative solutions to reduce externalities, read my new paper for the GWPF.

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July 1^st 2026 is the day the UK decided to replace the EU’s 25% safeguarding tariffs, imposed in 2018 and due to expire today, with 50% tariffs on a range of steel imports. While this may sound sensible to many (even to the people who have been decrying Trump’s imposition of tariffs), it isn’t if the UK doesn’t make the goods being tariffed efficiently or in sufficient quantity to supply the UK’s many downstream users of steel - most notably our car, aircraft parts and high-value machinery manufacturers.

The 50% tariffs were first announced in March, but few outside the industry seemed to notice, or care. The reason given for the tariffs was:

‘Domestic steelmaking is essential to the resilience and security of the UK’s critical national infrastructure and defence supply chains. Like many other countries, the UK steel industry has been severely impacted by persistent global overcapacity.’

This isn’t quite true. The UK steel industry closures reflect decades of deindustrialisation: loss of cost competitiveness due to government-inflicted high energy prices, a decarbonisation push and environmental rules. This encouraged a shift toward scrap-based/Electric Arc Furnace steelmaking, which was scuppered by the UK having the highest industrial electricity costs in the developed world.

The government also claimed that: ‘The measure will apply to imports of steel products that can also be made in the UK.’ Again, not quite true. Just because a product ‘can’ be made in the UK, that doesn’t mean that it is, or that it is produced at a competitive price, or that it is produced in sufficient quantities to meet total UK demand.

Luckily, thanks to industry lobbying, the 50% tariffs were reviewed last week, days before they were due to come into force. In the revision, several products were removed, and strangely some were moved to different categories, but the big revision was in the dedicated tariff-free quotas given to some countries but not to others - well, actually let’s be honest, the tariff-free quotas were mainly given to the EU. From the chart below, in the second column from the right, you can see that the EU received more than 50% of the quota in all of the steel product categories, except for categories 20 and 21, where Turkey managed to reduce the EU’s share to a mere 29% and 24% of the total quota. (Category 20 is gas pipes, and 21 is hollow sections, in case you are interested.)

The 50% tariffs apply only to goods imported above the tariff-free quotas. But the tariff-free quotas seem to be there to protect EU steel suppliers more than British ones. The EU was the only area to receive a tariff-free quota in every steel category. Of the total 3.218 million tonnes of tariff-free quotas handed out, the EU was awarded 65%. Up from a mere 62% of the original 2.65 million tonne tariff-free quota announced in March 2026. Turkey managed to get 7% of the increased quota but only for 7 categories of steel; India, South Korea, and Vietnam each got 5%; the US and the UAE both got less than 0.5%; Switzerland and Japan got 0.03% and 0.04%, respectively; and the rest of the world can fight over the 11.5% residual quotas.

This list obviously leaves out China, the world’s largest exporter of iron and steel, as well as products made with them. But it also excludes Indonesia, Brazil, Mexico, Taiwan, Canada, Malaysia, and many other countries that export steel and are not known for dumping or other anti-competitive trade practices.

The quota ‘list’ also overlooks the fact that Germany is the world’s second largest exporter of both HS72 Iron and steel and HS73 products made with iron and steel, despite having no commercial deposits of iron ore or metallurgical coal. But instead imports both from Brazil and Australia. But somehow, having your steel industry undercut by Germany is fine with UK politicians, but not by China.

How does Germany do it? They have much lower carbon taxes and network costs on the energy used by their steel producers than in the UK. The Chart below was created by the GWPF in 2021; since then, the UK has added even more renewables to its electricity grid, pushing up its network costs.

Network costs include Transmission Network Use of System high-voltage national transmission, local low-voltage distribution costs, system balancing costs, connection charges, energy lost during transmission and distribution, and a levy for distribution in remote areas. These costs are built into the Standing Charge and so often aren’t explained or itemised. But this is why the standing charges increase even if a company reduces its electricity use or stops using it altogether. The more renewable capacity added to the UK grid, and the further it is from the centres of demand, the higher the transmission costs. So, put simply, increases in wind farms far off the coast of Scotland increase transmission costs. Network costs also increase balancing costs, which also rise with higher levels of intermittent renewables. Network costs make up between 20% and 40% of an industrial user’s electricity bill, depending on their contract, and are rising due to grid upgrades to accommodate growing renewables, electrification, and AI demand growth.

Policy costs cover subsidies for renewables, such as Contracts for Difference, Renewable Obligation Certificates, and Feed-in Tariffs, as well as the cost of the Capacity market. Since April, 75% of the cost of renewable obligations have been moved to general taxation, but the other charges remain.

But back to the Tariffs.

The EU is the world’s largest Steel exporter, not China

Despite the focus on China, taken together, the EU exports almost double the value of China’s exports of HS72 iron and steel and a third more than China’s exports of HS73 Products made with Iron and steel. So why is the UK offering the EU such a large tariff-free quota, while claiming that it is China that is distorting the world’s markets?

The UK imported 7.13 million tonnes of HS72 iron and steel in 2025, of which 4.3 million tonnes were products that will now be subject to the 50% tariffs applied to imports above the tariff-free quotas of the countries supplying the steel. It is unlikely that so many of these products would have been imported in 2025 if they had been available domestically.

It is also unlikely the steel imported from the EU will breach the EU’s generous quotas, while steel imported from almost all other countries will. And while some may argue that it is correct to give the EU such a large quota, given our trade agreement with them, the UK also has trade agreements with Canada, Mexico, and Malaysia, all members of the CPTPP, as well as a separate CETA trade agreement with Canada. Regardless, these countries failed to secure any amount of quota to supply the UK with the steel it needs. So much for trade agreements.

Strangely, there is also an additional annual 2.4 million tonne tariff-free quota for Category 1 steel imports (non-alloy hot-rolled flat products) if the imported steel is used to fabricate goods on the Government’s authorised products list. It would appear that the Government is expecting a revival of the UK steel industry, as this Specific Quota is almost double the total tonnage of Category 1 steel imported in 2025. As recasting and reshaping this steel will require plentiful cheap energy - either electricity or gas - I suspect the government will be disappointed unless our new Prime Minister sacks Ed Miliband and removes all of the UK’s taxes on energy.

But the more important question is: What happened to the UK’s steel industry?

In 2023, the UK produced 5.6 million tonnes of crude steel; in 2024, it fell below 4 million tonnes, about 30% of the UK’s consumption of 9.3 million tonnes in 2024. Production is likely to be less than 2 million tonnes in 2025, and only this amount is being produced because the government prevented British Steel from closing its Scunthorpe blast furnaces. The main reason for the closures at Redcar, Port Talbot, Liberty, and almost Scunthorpe is global overcapacity, high energy costs, and the move to decarbonise by replacing blast furnaces with electric arc furnaces, even though the UK has the highest industrial electricity prices in the developed world.

But while our net-zero-worshipping politicians (from both parties) seem happy to watch the domestic steel industry close, the UK’s main export industries still rely on steel. The UK’s steel-intensive downstream industries include fabricated metal products, engineering and advanced manufacturing, construction and mining vehicles, automotive production, aircraft part production, rail, appliances, scientific equipment, and construction.

On average, each vehicle manufactured in the UK uses almost a tonne of steel, and 80% of all vehicles made in the UK are exported. As are almost all of the UK’s production of aircraft parts, mining equipment, and a large proportion of its engineering equipment and precision instruments. It is important that these export goods remain competitive internationally. Adding a 50% tariff to the steel that they have to import will do the opposite.

Maybe it is time for the Government to remove the root cause of the problem: the UK’s three carbon taxes and electricity policy costs that have made steel production in the UK uneconomic. This is also true for most UK manufacturers, who have had to shift toward extremely high-value products to remain in business. A complex system of tariff-free quotas by country and product, plus 50% tariffs on steel imports outside those quotas, will not save the UK steel industry.

A better solution would be to give UK steel producers and other manufacturers tax incentives to upgrade their plant and equipment to the most efficient available. This won’t happen overnight, but at least it won’t kill the UK’s downstream steel users, unlike the current 50% tariff system. And it would increase the elusive 'economic growth’ the government is still looking for.

UK manufacturers that use steel as an input contribute about £220 billion in GVA (about 9% of GDP) and employ about 2.6 million people directly. Until the UK rebuilds its steel production capacity, we should do whatever we can to support downstream steel users, including allowing them to import non-EU steel if it meets their requirements.

It seems strange that the UK should be protecting its last remaining (Chinese-owned) steel producer from cheap Chinese steel (and cheap Mexican, Canadian, US, UAE, Japanese, South Korean, etc, etc, steel) when the UK has not followed the US’s or the EU’s tariffs on Chinese Electric Vehicles (EVs). The UK has not imposed additional tariffs on imported EVs from China, which face the same 10% tariff as any other car imported outside a trade agreement. The EU applies both a 10% tariff and an additional tariff on Chinese EVs, ranging from 17% to 38% depending on the manufacturer, while the US applies a 100% tariff.

As already mentioned, but it needs reiterating, vehicle manufacturing is both one of the UK’s largest steel users and one of the UK’s most valuable exports. The UK still has its unrepentant EV mandate in place for domestic car purchases. So the Government is asking UK car manufacturers to compete with Chinese EVs in the UK’s domestic market, while also making one of their input materials more expensive with the imposition of 50% tariffs designed to protect the UK’s almost-dead steel manufacturers from cheap Chinese steel. What am I missing?

And it is not just EVs. There will be many end products that are imported with minimal tariffs while domestic manufacturers are forced to pay a 50% tariff on the steel they need to import to make the same products in the UK.

Why is the government doing this?

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Last week, the BBC declared that it had not breached its impartiality rules, claiming there were no significant counter-voices arguing for positive or even neutral effects of Brexit on the UK economy. The BBC likened Brexit to settled science, such as ‘Climate Change’. Considering that the IPCC has recently abandoned its extreme Representative Concentration Pathways (RCP) 8.5 and its intermediate RCP 6.0 scenario, it seems strange that the BBC would use climate change as an example of ‘settled science’. Now, a new book, Brexit: The Facts Strike Back, makes the BBC’s claims about Brexit’s economic harms look equally shaky. The book will no doubt be ignored by the BBC so that it can continue its bias against Brexit.

The BBC Charter

For non-UK readers, the BBC’s budget was £5.9 billion in 2025, of which £3.8 billion came from a tax on UK television owners. Because the majority of its funding is compulsory (even Brexit supporters have to pay it), the BBC’s official Charter is a commitment to “due impartiality”, which means reflecting a wide range of views fairly, rigorously challenging claims, and not taking sides or revealing its own opinions.

Despite its Charter, Pro-Brexit voices are under-represented on BBC programmes, negative Brexit economic predictions are emphasised, and positive post-Brexit developments are downplayed. Even after Leave won the Referendum, a BBC political panel would still be at least three-quarters REMAIN supporters, intent on trying to convince the British public that they had voted the wrong way, or that they didn’t know what they were voting for.

However, it has become more and more obvious that it is the BBC and their Remainer panellists are the ones who knew almost nothing about the EU, how it works, what laws it had imposed on the UK, or how much UK taxpayers had to pay so private companies had ‘free’ access to EU markets. For most of these Remainiacs, EU membership was only about which passport queues they could use on their annual holidays in Spain.

What the BBC should be explaining to its viewers about the Reset

10 years after the Referendum, the BBC is at it again. This time, they are promoting the Starmer Government’s Reset, which will dynamically align the UK with EU agricultural rules, food standards, animal welfare rules, and our carbon trading systems. Unfortunately, few BBC journalists seem to understand that doing so would be fixing something that isn’t broken. These changes would increase costs for all UK companies, who will be forced to comply with the massive number of EU regulations imposed since we left, whether or not they trade with the EU.

UK companies will also have to buy their carbon allowance on the EU’s Emission Trading Scheme (ETS), even though it is currently about 20% higher than the UK’s ETS. These costs will be passed on to UK consumers. The Reset would also prevent UK politicians from making any decisions and from taking any blame when things go wrong, as they invariably will. This is probably why Labour MPs are so keen on the Reset.

The Reset will oblige the UK to apply EU regulations simultaneously. This obligation is very clearly explained by the European Commission in its Council decision published last year, in Section 5.1, paragraph 3. The European Commission document is equally clear that the Court of Justice of the European Union is the ultimate authority for all questions of European Union law. So the Reset means that the UK would adopt EU laws and allow the EU’s court to preside over any disputes. Only the BBC could imagine that this is fair, or equitable, or even normal. In the world of trade, such a one-sided agreement giving regulatory power to one of your main suppliers would be considered insane.

Why is the UK doing this?

There is a myth circulating in Westminster, the BBC, and the public service, including, worryingly, the Bank of England, that the UK’s trade depends on its government-to-government relationships and that imaginary ‘friction’ between the UK and the EU has caused ‘trade’ between the two countries to fall. This is total rubbish. For a start, they are only considering goods exports and ignoring the fact that goods imports from the EU are increasing and that service trade is booming. So maybe this isn’t about relationships at all.

Here is a list of things the BBC should know about UK-EU trade:

1. Relationship building will not increase trade

Trade between the EU and the UK will not increase through national-level ‘relationship building’. Almost all trade is between companies, consumers, and producers rather than between governments. People and companies purchase what they need or want if it is available at an affordable price, regardless of a government-to-government ‘relationship’ or a trade agreement. For example, in 2024, the UK’s largest goods export market was the US, and its largest goods import supplier was China; yet, the UK does not have a trade agreement with either country. Even adversaries engage in trade: Germany continues to purchase gas from Russia, the US continues to acquire electrical goods from China, and China continues to buy iron ore and coal from Australia.

Relationship-building won’t make people buy goods they don’t want, don’t need or can’t afford.

2. The UK’s Net Zero policy has reduced exports

The UK government’s Net Zero policy has had a more detrimental effect on UK exports to the EU than Brexit. Lower UK oil and gas production, due to restrictions on developing new fields and an excessive 78% tax rate on North Sea oil and gas companies, has unsurprisingly reduced UK oil and gas production and, consequently, its fuel exports. Fuel used to be among the UK’s largest exports. Both crude and refined oil exports to the EU, measured in tonnes to remove price fluctuations, declined by 26% between 2020 and 2025. Total UK crude oil exports fell by 37% between 2019 and 2024, according to the most recent DUKES publication. Trying to blame this decline on Brexit is duplicitous. BBC journalists should acknowledge that both current and previous governments’ Net Zero policies are responsible. The BBC is also a cheerleader for Net Zero, so it should be pleased by lower oil exports and should stop pretending this is due to Brexit policies.

Relationship-building won’t increase UK oil and gas production.

3. Net Zero mandates have also reduced chemical and car exports

Lower UK oil production and refining capacity have further reduced UK exports of chemicals and plastics: organic chemical exports to the EU fell by 51% between 2019 and 2025, while plastics exports to the EU declined by 10% over the same period. Chemicals are the UK’s second-largest goods export sector after machinery and transport equipment. This fall in chemical manufacturing has hit total UK exports. This has nothing to do with Brexit, and relationship-building won’t change it.

However, the most significant decline in exports has been in the UK’s exports of internal combustion engine (ICE) cars. Car manufacturing is a major UK export industry and part of the Machinery and Transport equipment sector. About 80% of the cars made in the UK are for export.

The UK and EU originally aimed to stop sales of new Internal Combustion Engine cars by 2035; however, the UK accelerated this to 2030, while the EU maintained the 2035 target, which it recently reduced to 90%. The UK has also announced that it will permit the sale of hybrid cars until 2035, but has retained its 2030 deadline for ICE sales.

EV mandates have severely affected UK car production in general, as well as ICE car exports to the EU. Total UK car exports (HS8703) to the EU were 23% lower in 2025 than in 2019 due to reduced exports of petrol and diesel cars. UK exports of ICE-only petrol cars to the EU decreased by 38% between 2019 and 2025, while exports of ICE-only diesel cars plummeted by 95%, resulting in a combined loss of exports worth £5.3 billion. Although exports of hybrid, plug-in hybrids, and EVs have increased by around 83%, a gain of £2.5 billion, this still leaves UK car exports to the EU £2.8 billion lower than they were in 2019.

This is not a relationship issue; this is a regulation issue. The UK government should not try to blame Brexit for the impact of its ill-advised regulations on vehicle engines on UK exports.

However, salvation is at hand. UK ICE cars are extremely popular in the US, and the US has agreed to reduce its Section 232 tariffs on 100,000 UK cars from 27.5% to 10%. This took effect on 30 June 2025 under Executive Order 14309. However, the US could withdraw this concession if the UK government agrees to align with EU SPS, food and agriculture regulations, as reciprocal beef exports were part of the US-UK trade deal. Why would the government do this? UK vehicle exports are much more important to the UK economy than food exports to the EU.

Relationship-building won’t reverse the EV mandate.

4. Trade has not changed, but how we measure it has

There has been a significant structural change in what can be classified as a UK or EU export under the rules of origin in the UK-EU Trade and Cooperation Agreement (TCA). UK and EU goods exports are only tariff-free and quota-free under the TCA, if they meet the required Regional Value Content (RVC) to qualify as UK or EU products. The TCA’s regional value requirements exclude many products that were previously classified as UK or EU goods by the EU’s statistical agency, Intrastat, because these goods were simply imports distributed from UK or EU ports.

The TCA RVC requires that unprocessed agricultural products be wholly sourced from either the UK or the EU to be traded tariff- and quota-free. This has led to the removal of many goods from the UK’s trade statistics. The most obvious example is tropical fruit and nuts, which once accounted for a significant portion of UK fruit exports to the EU; see the chart below.

UK Fruit exports to the EU fell from 200,000 tonnes in 2020 to 50,000 in 2025. The largest export reductions were in Citrus fruit, down by 96%, Bananas and Plantains, down by 95%, and melons and pawpaws, down by 88%. In 2020, citrus fruit was the UK’s largest fruit export by volume, even though the UK does not have the climate to grow citrus fruit. These would have been oranges from South Africa and limes from India and the Caribbean, landed and distributed from the UK to other EU destinations. Similarly, the UK cannot grow cashews, coconuts, bananas, avocadoes or mangoes, but the EU’s Intrastat recorded these as UK exports before Brexit. These were never UK products; they were primarily grown in Commonwealth countries and distributed to other EU countries from the UK.

Relationship building, aligning with EU SPS regulations or signing a veterinary agreement will not change a product’s origin nor allow it to meet the RVC required by the TCA. UK fruit exports will never return to their previous levels unless we really do have massive global warming.

Relationship-building won’t turn the UK into a tropical fruit producer.

5. Regional Value Content removed many goods from trade statistics

However, regional value requirements have not only excluded unprocessed agricultural goods from UK export statistics. UK exports of unsorted diamonds (HS 710210) to the EU varied from between £400 million and £1.1 billion pounds before Brexit, but exports are now nearly zero. These diamonds would have been re-exports of uncut diamonds imported from Australia, Canada, and Zimbabwe.

No amount of relationship building with the EU will change this.

The RVC for manufactured goods prevents many UK-branded goods from being counted as UK exports when manufactured in Asia for a UK company. For example, clothing RVC requires that the fabric must be woven or knitted, cut, and sewn in the UK. Hats, shoes, textiles, umbrellas, and walking sticks have similarly restrictive regional content requirements. Furniture, lighting, electrical equipment, optical equipment, toys, games, and sports equipment are limited to 50% of the value of the non-originating material (ex works). However, some goods in the miscellaneous manufactured articles sector have a limit of just 15% for their non-originating value.

UK goods that do not meet the TCA’s regional value requirements were responsible for a £7 billion reduction in UK exports to the EU between 2019 and 2024. No amount of relationship building will turn golf balls and golf clubs, musical instruments, textiles, cutlery, glassware, clothing, or footwear made in Asia for UK companies into UK exports to the EU under the rules of the TCA.

This is also true for imports from the EU: shoes imported from Belgium and the Netherlands appear to have dropped by over £1 billion since 2019, while UK shoe imports from Vietnam have increased by a similar amount. A perfect example of the Rotterdam effect.

Some goods were granted a transition period to comply with the new content requirements. Notably, electric vehicles were mandated to use locally produced batteries by January 2024; this requirement was extended to the end of 2026, when it became clear that neither the UK nor the EU could meet the deadline. However, other products had compliance deadlines in 2023 and 2024 that were not extended, such as active pharmaceutical ingredients, certain petrochemical-based products, and specific biopharmaceuticals, which had to be sourced within the UK or the EU to avoid tariffs.

No amount of relationship-building with the EU will ever allow the UK and EU to pretend that goods made in China, Vietnam, Bangladesh, etc., for UK or EU companies are actually UK or EU exports.

Just because the EU is still kidding itself that goods landed in Rotterdam are actually Dutch exports, the UK can no longer play that game. The BBC should understand the structural differences in UK trade statistics since Brexit.

Relationship-building won’t increase the regional value of UK exports.

6. The choice of base years changes the results

The BBC should be aware that economists who support rejoining the EU avoid comparing exports in 2025 to those in 2017, 2016, or any year preceding the Brexit referendum; they focus solely on 2018 and 2019 because they know there was considerable stockpiling of many goods with long or indefinite shelf lives.

Goods were stockpiled in 2018 and 2019 ahead of Brexit to avoid potential tariffs if the UK and EU could not reach a trade deal, which also exaggerated the decline in UK-EU trade between 2018/19 and 2025.

Reviewing trade between two single years fails to provide insight into UK or EU trade dynamics. Economists who favour remaining in the EU often compare 2018 or 2019 with 2025 to demonstrate a decline in UK trade, while ignoring the fact that UK-EU trade rules remained unchanged until January 1, 2021. No one wishes to use 2020 as a base year because it was the first year of COVID, even though the UK kept its ports open and its trading relationship with the EU unchanged.

My favourite example is HS 89: Ships, boats, and floating structures: the UK typically exports ships worth around £500 million to the EU each year, except in 2019 when this figure doubled to £1.1 billion, largely due to the export of a luxury yacht to Malta. After that, UK exports to the EU returned to approximately £500 million, but the 2019 spike contributes to the misconception that Brexit is responsible for the decline in UK exports. Trade statistics also show stockpiling before Brexit in arms and ammunition, clocks and watches, ceramic products, carpets and floor coverings, pyrotechnic products, jewellery, and various food preparations such as mustard, condiments, and cheese. But has the BBC ever mentioned this?

Relationship-building won’t remove pre-Brexit stockpiling from past trade figures.

7. Relative currencies and carbon taxes affect competitiveness

Relative currency values matter in trade. The UK also has a high relative currency, making UK goods even more expensive and less competitive in the EU. The Bank of England has the power to change this, but improved relationships won’t. The European Central Bank has been cutting its interest rates furiously since September 2023. The ECB’s deposit rate has fallen from 4% in September 2023 to 2% in June 2025, where it has remained, while the Bank of England only reduced its September 2023 rate of 5.25% to 3.75% in 2026. This interest rate differential will help keep the pound relatively higher than the Euro.

The UK has the highest industrial energy costs among developed countries, so it is an expensive producer of homogeneous goods, especially energy-intensive manufactured materials. Joining the EU’s Emissions Trading Scheme (ETS), as proposed in the government’s Reset, will increase the carbon taxes paid by UK manufacturers. At present, the EU ETS is about 20% higher than the UK’s ETS, and the UK will retain its Carbon Price Support tax until 2028, as well as its Climate Change Levy on UK industry. Together, these 3 carbon taxes will wipe out what is left of UK industry.

Relationship-building won’t lower the pound or reduce UK carbon taxes.

8. EU agriculture is still subsidised; a veterinary agreement won’t increase UK competitiveness

The suggestion that a veterinary agreement with the EU, including alignment on agricultural standards, would reduce post-Brexit red tape for food, farm, and fish exports overlooks some very basic economic factors that are the real causes of the decline in UK agricultural exports to the EU. There is a large difference in competitiveness between UK and EU food, which is primarily due to EU agricultural subsidies and the currency differential, not red tape.

The EU still subsidises its farmers through the Common Agricultural Policy (CAP), with payments ranging from €100 to €250 per hectare, along with additional payments for smaller farms, those with natural constraints such as poor or steep land, and for environmental or rural development programs. These payments, combined with a weaker currency, make EU food cheaper in the UK than UK products, as the UK has phased out its Basic Payment Scheme for Farmers and replaced it with environmental subsidies for taking land out of production. This lowers domestic production and increases domestic prices.

The UK is not self-sufficient in food and imported 35% of the food it consumed in 2025. How would it benefit the UK to tie itself to EU standards? The UK already has a significant agri-food trade deficit with the EU. No amount of relationship-building will make UK agrifoods more competitive in the EU, and the current proposal to dynamically align with the EU’s Sanitary and Phytosanitary regulations will only bind the UK to sourcing imported food from EU producers rather than more efficient non-EU suppliers.

No amount of ‘relationship building’ will subsidise UK farmers.

9. Trade is determined by the economic health of your trading partners

The economic health of your trading partners also matters. The large EU economies have had even lower growth than the UK since 2019. Annual GDP growth in 2025: France was only 0.8%, Italy was 0.7%, and Germany was 0.2%. The Netherlands has recovered, with GDP up 1.3%, and Belgium’s 2025 GDP is expected to be 1%. Together with Ireland, these countries are the UK’s largest EU trading partners, accounting for almost two-thirds of UK exports to the EU. The BBC should not be surprised if these countries aren’t spending lavishly on expensive UK exports. No amount of ‘relationship building’ will change this, nor will aligning with EU regulations, nor giving France even more of the UK’s fishing grounds.

10. UK industry is dying due to excessive energy costs, regulations, and taxes – goods exports will die with it

The BBC should recognise that several UK industries are in terminal decline, adversely affecting their exports. Examples include UK steel, aluminium, and zinc products. If the UK can no longer produce goods due to uncompetitive production costs, carbon taxes, and corporate taxes, UK companies will relocate their production to more favourable locations. These locations are seldom within the EU, where energy costs, carbon taxes, packaging taxes, and other corporate taxes tend to be as high or higher than in the UK, except for Irish corporate taxes.

This is also true of the many UK chemical exports to the EU, which have been falling steadily since 2013, after the introduction of the Carbon Price Support tax, environmental regulations, emissions trading schemes, a lack of investment in new production facilities, and a shortage of raw materials from the UK’s few remaining oil refineries. Better relations with the EU won’t change this. In fact, most of the UK’s chemical, steel, and aluminium woes stem from regulations and carbon taxes that were in place when we were part of the EU.

Some goods exports have been affected by both the RVC rules and the UK’s environmental regulations. For example, the UK’s exports of semi-finished products of iron or non-alloy steel containing less than 0.25% carbon have dropped by 91%. This decline is partially due to the TCA’s rules of origin, which halved exports of these products, and then, in 2024, exports collapsed after the closure of the UK’s Port Talbot steel mill in September 2024.

No amount of ‘relationship building’ will rejuvenate the UK’s lost industries.

Conclusion

Trade is much more about supply, demand and overall competitiveness than the BBC understands or is willing to admit. Trade is determined by the relative efficiency of production, relative currency values, and the economic health of both your trading partners and your domestic industries. UK-EU trade statistics have the added complication of changing both the definition of what can be counted as a UK or EU export. The accuracy of UK trade data has improved after the data-gathering body moved from the EU’s Intrastat surveys to HMRC’s more exact data collection for tariff imposition. The latter has a much greater financial incentive to be accurate. The former has a political incentive to make EU trade between member states appear higher than it is.

No amount of ‘relationship building’, ‘regulatory alignment’, veterinary agreements, or capitulation to aggressive EU demands for youth mobility schemes, discounted student fees, and greater access to UK fishing grounds will increase UK goods exports to the EU.

The only way to increase UK exports is to create a better economic environment for producing internationally competitive goods in the UK.

The government could start by removing its carbon taxes, emission regulations, renewable energy subsidies, EV mandates, punitive taxes on oil and gas companies, and legal restrictions on new oil and gas field development. Wasting time haggling with the economically moribund EU about lifting its overbearing SPS rules will not increase UK exports.

This article is based on one that I wrote for the book Brexit: The Facts Strike Back. Please buy two, and send one to your favourite BBC Remainer.

Since 2022, at least six major UK ceramics manufacturers have entered administration or liquidation: Wade Ceramics, Johnson Tiles, Heraldic Pottery, Royal Stafford, Moorcroft Pottery, and Denby Pottery. The overwhelmingly cited reason for these closures was energy costs. Ceramic Kilns are highly energy-intensive, and gas accounts for about 85% of their energy use. Competition from cheaper imports was also cited as a problem, but imports are often cheaper because their energy is cheaper. If the UK also had cheaper energy, UK companies would find it easier to compete.

Despite this, the government has decided to ‘level the playing field with imported goods’ by adding Carbon Border Adjustment Mechanism (CBAM) charges to industries where the UK is uncompetitive or no longer produces these goods and has become a major importer, rather than on industries such as glass and ceramics that are still viable in the UK or in the case of the ceramics manufacturers - clinging on for dear life.1

Unfortunately, the UK’s high carbon taxes from the Emissions Trading Scheme (ETS), the Carbon Price Support (CPS), and the Climate Change Levy have already driven many UK producers out of business. Applying a CBAM now will be too late to correct this. Joining the EU’s ETS will also increase costs for UK manufacturers, as the UK’s ETS has been consistently cheaper than the EU’s since the two schemes decoupled in 2021. But for some inexplicable reason, the Government has decided to join the EU’s scheme, thereby increasing costs for UK producers while retaining the UK’s other carbon taxes - CPS and CCL. Carbon taxes that do not apply to the UK’s EU competitors.

CBAM industry choices with little domestic production

The previous Conservative government proposed to apply a CBAM to Aluminium, Cement, Ceramics, Fertiliser, Glass, Hydrogen, and Iron and steel. The current Labour government’s CBAM proposal excludes Ceramics and Glass, two important UK energy-intensive industries in which the UK remains a competitive producer.

While it can be argued that a CBAM would protect UK industries from imports from countries without carbon taxes, it would be more helpful for the economy as a whole if the UK simply removed its carbon taxes on these industries rather than adding additional costs to imports.

If domestic production is negligible or very small, as is the case in the UK for fertilisers, aluminium, and steel, there is no need to impose a CBAM on imports at all, as there is no longer a domestic industry to protect.

The EU is in a different position to the UK, because it still has large producers of its CBAM products: Aluminium, Cement, Fertilisers, Hydrogen, Iron and steel, and electricity.2

Should we be surprised that the UK’s revised CBAM product list so closely resembles that of the EU? Is the UK government regulating to protect our EU suppliers to the detriment of UK producers?

In the case of fertiliser, this seems to be undoubtedly true.

Fertilisers

The latest UK CBAM proposal covers imports of the fertilisers: Nitric acid; Sulphonitric acids; Ammonia, anhydrous or in aqueous solution; Nitrates of potassium; Mineral or chemical fertilisers, nitrogenous; Mineral or chemical fertilisers containing 3 of the fertilising elements nitrogen, phosphorus and potassium; and Mineral or chemical fertilisers containing 2 fertilising elements.3 Exactly the same 8-digit HS code products as the EU’s CBAM list.4

However, the UK produces less than 30% of the fertiliser it uses each year, but even this production relies on imported raw ingredients, most importantly, ammonia.5 CF Fertilisers’ Billingham plant ceased ammonia production permanently in July 2023 after being temporarily idled in August 2022. This was the UK’s last major ammonia producer. Adding a CBAM to imported ammonia and imported Nitric acid made from it would increase costs for UK fertiliser mixers, which would be passed on to farmers and eventually raise the price of domestically produced food.

It is also strange that Sulphonitric acids, Nitrates of Potassium and mineral or chemical fertilisers containing either 2 or 3 fertilising elements are on the UK’s CBAM list of products in scope, as they are not currently produced on a large scale in the UK. Fertilisers containing 2 or 3 fertilising elements used to be made at the CF Fertilisers Ince site, which closed in 2022. Adding a CBAM to imported products when there is no alternative domestic supplier will necessarily increase agricultural production prices. Why is the government proposing to do this?

Compared to 2000, UK fertiliser output has halved, and the product mix has shifted away from broad-spectrum fertilisers toward nitrogen-only and imported blends, driven by plant closures, energy costs, environmental regulation, and global market restructuring.6 UK fertiliser use has fallen by 19.3% in the ten years up to 2024.7

CF Fertilisers closed its plant in Ince, Cheshire, in 2022, when European gas prices spiked.8[5] Fertiliser production is gas-intensive, so fertiliser production has moved to regions with cheaper gas. UK ETS allowances, as well as strict nitrogen-emissions regulations, have made domestic fertiliser production less competitive with imported fertiliser. The CF Fertiliser plant was one of the dominant industries in Ince, employing hundreds of people directly and many more indirectly.9

Most fertilisers are made from ammonia (NH₃), which is in turn made from natural gas. It takes about 0.9 tonnes of natural gas (methane, CH₄) to produce 1 tonne of ammonia. The process requires high temperatures (400–500°C) and pressures (>100 bar), typically generated by coal or gas combustion, although it can also be powered by electricity. Conventional production emits about 2–3 tonnes of CO₂ per tonne of nitrogen fertiliser, plus nitrous oxide (N₂O) emissions from nitric acid production, which can add another 0.2–2 tonnes of CO₂-Equivalent (CO₂e) per tonne, depending on abatement technology.

In the UK, fertiliser use typically increases arable crop yields by 30–50% and grassland productivity by 40–60% compared to unfertilised systems. Without fertiliser, most soils cannot supply sufficient nitrogen, phosphate, and potash to sustain high yields; therefore, fertiliser is critical for both food security and livestock forage production.10 Making fertiliser more expensive than it needs to be by adding an ETS on production or a CBAM on imports makes UK-produced foods more expensive.

Fertiliser production is emissions-intensive, and fertilisers are applied annually to farmland; therefore, it could be argued that it is appropriate to include a CBAM on imported fertilisers, but this would require UK farmers to have an alternative domestic supplier that is competitive in all respects except the cost of ETS allowances.

However, only nitrogen fertiliser production remains in the UK; the government could argue that it seeks to protect this remaining production by applying a CBAM to imported nitrogen fertilisers, but then why is it also adding a CBAM to imported ammonia, which is needed to make nitrogen fertilisers in the UK?

In 2024, the UK imported 3.22 million tonnes of the fertiliser products that will be covered by the latest update to the UK’s proposed CBAM.11 Almost all of which will be charged for both their CO₂ and their nitrous oxide emissions. Making the CBAM doubly expensive.

US ammonia is cheaper because US gas is cheaper

Most of the UK’s ammonia imports come from the US, but they are not cheaper than UK-produced ammonia due to differences in ETS costs. The biggest price differential comes from the difference in natural gas prices between the US and the UK, and from the UK’s additional CPS and CCL charges on the energy used to make ammonia. The UK should be an efficient producer of ammonia, but instead, we import it from the US, where natural gas prices are a third to a quarter of those in the UK.

Almost all ammonia (2NH₃) is produced by the Haber-Bosch process, which uses natural gas and air at high pressure and a medium industrial temperature. Instead of adding a CBAM to imports that the UK doesn’t make any more, the UK would be better to: encourage UK gas production and exploration in the North Sea; allow hydraulic fracturing for gas on land; and remove the additional 38% ‘Windfall’ tax on North Sea gas production, thereby lowering the cost of the UK’s domestic natural gas feedstock for fertiliser production.

The UK already has an ETS on energy used for combustion, an ETS charged on the production of ammonia and nitric acid, as well as the CPS and CCL. This is triple taxation, which adds to the UK’s high gas prices, making UK fertiliser uncompetitive with imported fertiliser. Removing these additional energy taxes would reduce the cost of an essential input for food production and food security.

But that is not the point of CBAM - it is just about aligning with the EU!

There is no need for the UK to impose a CBAM on fertiliser or on imported ammonia used to make fertiliser because there are no longer any UK producers to protect. However, if we compare the UK’s revised CBAM with that of the EU, shown in Figures 1 and 2 below, it is clear that the UK’s CBAM is intended to protect the EU’s fertiliser producers from cheaper international producers, even though the EU has to import almost all of its natural gas feedstock - which is tariff and CBAM free.

The UK adding a CBAM to fertiliser is just an example of the Government aligning with EU regulation, without a remit or going through the parliamentary process, even though the EU regulations are not applicable to the UK industry as the UK does not have a fertiliser industry to protect. This CBAM is intended to protect the EU’s fertiliser industry by making the UK a captured market. The result? UK farmers will be forced to pay higher costs to protect EU fertiliser producers, and these costs will be passed on to UK shoppers.

Figure 1: Products covered by the UK CBAM on Fertilisers

Figure 2: Products covered by the EU CBAM on Fertilisers

In the long run, protection doesn’t work

No protected industry ever benefits in the long term from protectionism. Nor does the economy benefit from protecting industries that are failing due to government policy. Destroying an industry with one set of regulations and then offering it a bail out with another only helps to employ more public servants: one group to administer the destructive regulations and then other to administer the ameliorating protections. A better solution would be to simply remove the destructive regulations. The government should look at why an industry is uncompetitive and, if the cause is within the government’s remit, fix the cause. In the case of UK fertiliser production, it would be far more beneficial to scrap the UK’s three carbon taxes and encourage more gas production.

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The Labour Party’s EU Reset agreement to follow EU SPS regulations, animal welfare, and food standards is potentially disastrous for British farmers and will add yet more packaging costs to UK food manufacturers.

Last May, the Labour Party’s EU Reset agreed that the UK would immediately apply all EU rules covering plant and animal health and food marketing standards, including provisions on certification, controls, and substantive requirements on trade to/from third countries. These controls include documentary, identity and physical checks to ensure that goods comply with EU health, safety and quality standards. Remember that point: ‘ensure goods comply with EU health standards’ as it is the point of this essay.

But note that this agreement applies not only to UK goods exported to the EU, but also to all food production in Great Britain and to all goods imported into the UK from non-EU countries. Effectively, the UK would be enacting laws to protect its EU suppliers at the expense of UK producers, UK consumers, and its non-EU suppliers.

ECJ in control, again.

Worse still, the ECJ will adjudicate any disputes arising from this one-sided agreement, as it is the sole arbiter of EU law, and all UK food and agriculture laws, now and in the future, will be EU laws. The UK won’t even be able to review the laws before they are adopted, as the agreement clearly obliges the UK to apply EU laws simultaneously.

An agreement made on false assumptions

Anyone reading this agreement, which you can read here, may imagine that the UK is a large exporter of agricultural goods to the EU, implying this is trade worth preserving, and that EU plant and animal health was exemplary, implying it is worth copying, but neither assumption is true.

UK SITC 0 Food and live animal exports to the EU made up just 1.3% of all UK exports in 2025. This is not due to Brexit; the UK is not a large exporter of food to any location. Almost all UK agricultural production is consumed domestically. In addition, 35% of the food consumed in the UK is imported, of which about 68% to 70% comes from the EU, as it did before Brexit. The rest of the UK’s imported food comes from non-EU countries.

As for the other assumption, that the EU has exemplary animal and plant health, nothing could be further from the truth. EU plant and animal health is some of the WORSE in the world. Yes, you read that correctly, worse, not better and certainly not exemplary. So why is the UK adopting EU regulations? Why does Labour want EU products to be able to enter the UK without certificates or controls, as specified by the EU agreement shown below?

‘A common sanitary and phytosanitary area between the Union and the United Kingdom would … result in the vast majority of movements of animals, animal products, plants, and plant products between Great Britain and the Union being undertaken without the certificates or controls that are currently required or expected.’[1]

Animal Diseases in the EU

1. Let’s start with foot-and-mouth disease (FMD).

Foot and Mouth disease decimated the UK dairy industry in 2001 when 2,026 cases of FMD were confirmed, and 6.45 million cattle, sheep and pigs were culled to eradicate it. FMD is a disease that spreads easily in the UK climate and in the type of farm animals kept in the UK. There was a smaller second outbreak in 2007; 1,578 animals were culled, but only 278 cattle tested positive for the virus, according to post-mortem analysis.

Foot and Mouth Disease outbreaks were incredibly expensive for UK farmers and its food production industry, which is why the UK has been so careful to avoid FMD. The UK has been very successful in this endeavour and has had no cases since 2007. None – in almost 20 years.

So how is the EU doing with Foot and Mouth Disease?

Not so good. In January 2025, a Foot and Mouth Disease outbreak started in Germany in a small herd of water buffalo. By February, it had reached Hungary, and by March, it was in Slovakia – despite EU regulations, this disease easily crossed EU (certificate and control-free) borders, affecting more animals as it spread. In 2026, cases of Foot and Mouth Disease have been reported in Cyprus and Greece.

The first FMD outbreak in 2025 was in Brandenburg, Germany, and involved 14 animals; the second outbreak in Kisbajcs, Hungary, involved 1,400 dairy cattle; the third outbreak, also in Hungary, involved 3,000 animals; then it spread to Gyor-Sopron, Hungary, where another 1,000 cattle were involved; then to a second farm in Gyor-Sopron, Hungary, infecting another 2,500 animals; then it crossed another (certificate-free) border to reach Slovakia, where multiple outbreaks in Bratislavsky, Trnavsky, and Nitriansky involved approximately 10,000 animals.[2] The disease has now spread to Cyprus in February 2026 and to Greece in March 2026.[3]

For the record: There have been no cases of Foot and Mouth Disease (FMD) in any CPTPP country over the last 5 years. CPTPP countries are Australia, New Zealand, Brunei, Singapore, Vietnam, Malaysia, Japan, Canada, Mexico, Peru, Chile and the UK. North America, Central America and the Caribbean are officially recognised as FMD-free by the World Organisation for Animal Health (WOAH). There have been no cases of FMD in the Mercosur countries since 2013, when Venezuela had an outbreak. As of 2020, 98.6% of South America’s cattle population was officially recognised as FMD-free due to a vaccination program. The region is working towards full eradication.

Unlike South America, the EU doesn’t use FMD vaccines because it apparently wants to maintain its status as an “FMD-free without vaccination” area; when an outbreak occurs, the EU’s primary control measure is culling infected animals. It also claims to use movement restrictions and containment zones, but the present spread of the disease into 5 EU countries shows that this policy isn’t working.

Apparently, the loss of the EU’s “FMD-free without vaccination” status would cause it to lose billions in meat and dairy exports. So culling tens of thousands of animals is apparently a price worth paying, provided, of course, that its trading partners don’t notice that the “FMD-free” part of the “FMD-free without vaccination” is no longer true. Which countries want imports from countries with “FMD-free without vaccination” status? The US, Australia, Canada, Mexico, Chile, Peru, Costa Rica, Japan, New Zealand, Norway, Iceland, and of course – the UK. But not for very much longer if the Government gets its way.

The Labour Government plans to let the EU set all UK food and agricultural regulations, which will give the UK certificate-free borders with the EU – the area where this devastating disease is spreading - but also allow the EU to restrict our meat and dairy imports from all non-EU countries that have eradicated this disease. Who thinks that’s a smart idea?

DEFRA placed restrictions on both commercial and personal imports from the EU of dairy products and beef, pork, sheep and goat meat in April 2025 and only lifted the ban for commercial imports from Germany, Austria, Hungary and Slovakia in April this year. The ban still applies to commercial imports from Greece and Cyprus, as well as the ban on all personal dairy and meat imports from all EU countries, EFTA countries, and the Danish autonomous territories of Greenland and the Faroe Islands.

The Government wants the UK to have the same SPS status as these countries, which would mean UK exports to non-EU countries would also be blocked whenever a disease occurs in any part of the EU. It is also worth noting that the UK banned dairy and meat imports from Austria in 2025 even though Austria had no FMD cases; it just has (control-free) borders with Germany, Hungary and Slovakia.

Why would anyone want to have a border with the EU that is free from ‘certificates and controls’? Is our government mad, or are they just trying to clear more farmland for solar panels?

2. African Swine Fever

But the EU doesn’t just have a problem with Foot and Mouth Disease; it also has African Swine Fever, which has been ongoing for several years. Here is the Defra report from 2024. And here is one from 2026. ASF has infected both domestic pig farms and wild boar populations in Central and Eastern Europe, as well as getting into northern Spain and as far north as Sweden.

According to the 2024 report, as with FMD, the outbreak also started in Germany in a backyard premises with just 9 pigs, then spread to a finisher unit with 1,100 pigs and two smaller farms with 17 and 170 animals. In 2024, Poland reported its first outbreak in domestic pigs. By July 2024, it had 19 outbreaks in domestic pigs. Both Germany and Poland are major pork exporters. The outbreaks were in the German states of Hesse and Rhineland-Palatinate, which border North Rhine-Westphalia, which had 5.7 million pigs in 2024, the highest pig density in Germany. Much of the ‘Danish bacon’ the UK likes to consume is actually processed, cured, and packaged in Poland. These outbreaks could have been devastating to EU pork production.

The EU attempted to contain the outbreak with trade restrictions, movement controls, surveillance zones, and ‘Stamping out’ (mandatory culling), as well as a ban on wild boar hunting except for trained hunters killing infected animals. However, despite these measures, there were also 4 outbreaks in domestic pigs in Latvia near the border with Estonia, 5 in Lithuania, 2 in Greece, 34 in Romania, and 1 in Croatia, affecting 83 pigs. And these figures were published in July 2024 for domestic pig farms. There were also outbreaks in the wild boar populations of all of these countries, as well as in Italy, Sweden, Hungary, Estonia, the Czech Republic, and Slovakia.

But things got worse. The World Organisation for Animal Health (WOAH) figures show that there were almost 1000 outbreaks in Europe on domestic pig farms in July 2024, and over 900 in August 2024. Pig farms can contain anything from a dozen animals to thousands of animals. According to WOAH records, there were no months between Jan 2023 and Mar 2026 with no outbreaks of African Swine Fever in domestic pigs in Europe.

The chart below shows WOAH data for 2023 to March 2026.[4] I have highlighted the EU countries. It is worth noting that these are the number of outbreaks, not the number of animals. For some of the countries showing small numbers of outbreaks, such as Germany in 2024, we have already discussed how this includes small farms with just 9 animals and much larger commercial farms with over 1,000 animals. According to the UK’s national Pig Association, Estonia had 11 outbreaks in 2025, one of which occurred on the country’s largest pig farm, resulting in the culling of 28,500 pigs.[5]

It is also interesting that while the EU is opposed to vaccinating its cattle against FMD, it is interested in developing a vaccine for African Swine Fever and has funded this effort through Horizon’s VAX4ASF project, a collaboration among several institutions, including the UK’s Pirbright Institute. The Pirbright Institute is also working with another UK company, The Vaccine Group, to develop a safe and effective vaccine for ASF.[6]

It is great that the UK has the scientific freedom to develop this type of vaccine, scientific freedom that will also be curtailed if the UK lets the EU make its gene editing regulations – or not. The EU is not keen on gene editing, even to save thousands of pigs.

The UK has never had an outbreak of African Swine Fever.

The UK has strict biosecurity and import controls to keep ASF out; it is illegal to feed food waste to pigs; and it has banned personal imports of meat and dairy products, as discussed earlier.

UK Border Force, Port Health Authorities, and Customs regularly seize illegal meat that could carry diseases such as African Swine Fever and Foot-and-Mouth Disease. In 2024, Dover Port Health Authority seized almost 100 tonnes of illegal meat in 868 separate seizures. This was an increase from 56 tonnes in 2023 and less than 4 tonnes in 27 seizures in 2022.[7]

But all of this could change under the Labour Government’s Reset plans. But the Labour government wants the UK to follow EU plant and animal health rules (SPS) and to make its borders with the EU ‘certificate and control-free’.

I should add: North, South, and Central America are also free of African Swine Fever. Only the island of Hispaniola in the Caribbean experienced an outbreak in 2021, the first in the Americas in 40 years. CPTPP countries: Australia, Canada, Chile, Japan, Mexico, New Zealand and Peru are all ASF-free zones. Only 3 CPTPP countries have had ASF cases in the last 5 years. Singapore had an outbreak in 2023 but was declared ASF-free in 2024. Malaysia experienced an outbreak in 2021, which it controlled through quarantine, culling, and tighter biosecurity measures. Vietnam is the only CPTPP country to have had an ASF outbreak during the last 5 years that was anywhere close to those in the EU. The EU’s record on ASF control

Of all of the countries in all of the world, why would anyone let the EU make their SPS rules?

Next time, in part 2, I will deal with EU plant health. Spoiler alert: that isn’t very good either.

Part 3 will cover EU food packaging rules. Spoiler alert: incoming costs for UK food producers

[1] eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52025PC0408, (a) Common Sanitary and Phytosanitary Area, paragraph 3.

[2] Foot-and-mouth (FMD) disease outbreaks in Europe – Update – FVE – Federation of Veterinarians of Europe

[3] Foot-and-mouth disease - Food Safety - European Commission

[4] African swine fever in Europe

[5] ASF in Europe Updated Outbreak Assessment #35

[6] ASF in Europe Updated Outbreak Assessment #35, conclusion.

[7] Dover: Almost 100 tonnes of illegal meat seized at port last year - BBC News

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Not so long ago, the head of the Financial Conduct Authority (FCA) said of EU financial service regulations: “We are having lawyers go through page by page to say which elements will be inoperable if you just dumped them into UK legislation because they relate to different institutions and organisational structures.”1

That FCA CEO was Andrew Bailey, now the Governor of the Bank of England, so I was surprised to read that he is supporting the Starmer Government’s plan to dump hundreds of EU food and agricultural regulations on UK food manufacturers, food scientists and British farmers without a regulation-by-regulation review.

Bailey appears to be under the misapprehension that this regulation dump will ‘rebuild trade relations with Europe’ and ‘boost growth’. Presumably, the Governor also supports the UK joining the EU’s more expensive ETS market, which will increase carbon taxes on the UK’s few remaining manufacturers. Neither EU capitulation will ‘boost UK growth’. Instead, UK taxpayers will be forced to pay the EU to watch the UK economy sink under the weight of EU regulations.

The EU’s food and agricultural regulations.

Not only will the Reset force the UK to reinstate the farming, crop science and food production rules that were changed when we left the EU, we will also have to add thousands of new EU regulations. While we were free from the EU’s control, the EU imposed 13,000 Regulations and 12,000 Directives on its members, many of which cover food and agriculture. The EU’s changes range from banning food ingredients to lowering maximum pesticide residue limits to stricter packaging waste rules.

All UK food producers and manufacturers will have to comply with all EU food and farming regulations under Starmer’s reset, even if they do not export any food or agricultural products to the EU. And let’s be honest – that means most of them. The UK produced only 65% of the food it consumed in 2024; the 2025 figures have yet to be released, but countries that rely heavily on imported food rarely have much surplus food to export.

Who’s reviewing EU regulations?

Bailey’s statement last week displays a level of arrogance prevalent in Westminster and the City of London: in 2017 the FCA recognised that not all EU financial services regulations were appropriate for the UK and employed 15 lawyers full-time to work through the EU rulebook. But when the regulation dump falls on another more vital industry, food production, Bailey happily supports a blanket dump of EU food and agricultural regulations onto UK food producers. Increasing regulatory costs on companies will not ‘boost growth’ – the Bank of England Governor ought to know this.

And it is not just Bailey; Nick Thomas Symonds’ staff have yet to publish a granular analysis of the costs and consequences for UK food production of blindly following all EU regulations now and in the future. Instead, with zero knowledge of the EU rulebook or UK trade figures, Thomas Symonds agreed in May last year to join the EU’s SPS area, adopt its lower animal welfare standards and its unscientific ‘precautionary’ food standards. Thomas Symonds didn’t even bother to review what those EU regulations entailed or how much they had changed since we left the EU. Even during the last year, the EU has continued to add to its regulatory burden. A burden that will now also fall on all UK farmers, food producers and food technicians.

Thomas Symonds claimed that UK agrifood exporters had spent £210 million since 2023 on something he called ‘paperwork taxes’. This works out at just £70 million a year. Since 2023, the UK has exported food and live animals worth £34.309 BILLION to the EU2 £210 million is just 0.6% of this amount. All UK food producers are about to be hit with a mountain of regulation so that a handful of UK exporters to the EU can reduce some of their export costs. Ironically, if they are manufacturing this food in the UK, they are likely to find that their energy costs rise by far more than this ‘saving’ when the UK joins the EU ETS and has to pay higher carbon taxes.

I should also point out that this is not a ‘paperwork tax’; it is the cost of exporting goods to the EU, just as UK exporters exporting goods to the US have to pay for their US compliance costs. And, I should add, just as exporters from all over the world have to pay for UK compliance costs when they export goods to the UK. Unfortunately, some clever lobbyists have conned UK politicians yet again into using taxpayers’ money to pay their clients’ private export costs.

Trading with the EU is not free, even for EU members

What hasn’t been explained very clearly by the government, nor mentioned by the Bank of England Governor, is that the UK taxpayer will have to pay for this capitulation to EU rules. According to The Express and The Independent, the cost will be ‘around’ £1 billion a year. The UK exported only £12.1 billion of food and live animals to the EU in 2025, but Thomas Symonds has agreed to pay the EU £1 billion of taxpayers’ money so that a handful of private company exporters can save themselves £70 million. I have trouble believing that even Thomas Symond is this stupid.

For balance, The Grocer claims that UK payments for the SPS portion of the Reset would be just £700 million annually, and my own calculations made last November based on Norway’s payments came to a similar figure. But even £700 million is 10x the annual SPS cost to exporters that Thomas Symond claims he is trying to alleviate. Instead, UK taxpayers will primarily subsidise the EU with this money, while reducing the costs for a handful of private export companies, some of which are EU companies. The UK’s top ten food exporters to the EU include two Danish companies, Arla and Tulip, a German company, Muller, and an Irish company, Kingate Investments, as well as two US multinationals. It is also worth noting that export health certificates and veterinary checks for food exports to the EU are issued by UK local authorities. So most of the £70 million that Thomas Symonds is so concerned about does not go to the EU but to UK local authorities; the loss of this revenue stream for local authorities should be subtracted from any ‘saving’.

Why not just subsidise the Health Checks?

If the government were seriously concerned about the EU’s SPS compliance costs for UK food exporters, it could have subsidised the health checks rather than agreeing to pay the EU to join its SPS area and force non-exporting companies to change their production methods to comply with EU regulations. This would have saved UK taxpayers 90% of the proposed SPS payment and saved non-exporting UK farmers and food manufacturers untold amounts in compliance costs. We can only imagine why the Government didn’t think of this.

Not that SPS health certificates are the only cost of exporting food to the EU: UK exporters will still have to complete: customs declarations; rules of origin compliance to qualify for zero tariffs under the Trade and Cooperation Agreement; VAT obligations and potentially register for EU VAT and file EU VAT returns on B2C sales; comply with EU safety, labelling, and packaging rules including EU waste rules; EU EORI forms; EU Safety and Security declarations, packing lists and transport documents; and submit to EU customs risk checks, anti-fraud checks, security screening and weight/volume inspections as well as pay the usual haulage costs, insurance and cold chain energy costs. All those other costs will still exist, even under the proposed EU SPS capitulation.

And yet, some commentators continue to claim merely removing SPS export health certificates and veterinary checks will boost the UK economy by £5 billion ‘a year’. That is absurd. The original claim was £9 billion ‘by 2040’, i.e. about £600 million a year. In total, the UK only exported £12 billion of food and live animals to the EU in 2025. Removing a tiny amount of paperwork while leaving all other costs in place won’t increase UK food exports by £5 billion, a 40% increase in total food exports. The UK doesn’t have the capacity to increase its production by this amount and didn’t export anywhere near that amount of food when it was a full EU member (see the graph above). According to the ONS, UK food and live animal exports in 2020, the last year of the UK EU Transition Agreement, were only £10.8 billion in current prices, despite full EU access, and only £12.9 billion in CVM-adjusted prices.

One of the few UK animal products with net exports to the EU is milk, but UK farmers already export almost all, 97% to be exact, of those exports to Ireland, without any red tape restrictions, presumably because the milk comes from Northern Ireland, which already follows EU SPS regulations but has never had to pay the EU to do this. According to DEFRA’s Agriculture in the UK data sets, Table 8.6, the UK produced 15.128 billion litres of milk in 2024, the largest volume since 1986 – despite ‘Brexit’ red tape allegedly preventing agrifood exports, which is not evident in any of Defra’s data tables. It is hard to imagine how UK farmers could suddenly increase their milk production by another 40%.

The UK has never exported very much food to the EU because UK food is comparatively more expensive than EU food. Many EU food exporting countries have more farmland compared to the size of their populations, so have excess food to export, such as Ireland, or they have mechanised their production and rely on supplying the larger UK market, such as the Netherlands and Denmark, or they have warmer weather, longer growing seasons and can grow fruit and vegetables that the UK can’t, such as Spain. Add to this the fact that EU farmers are still subsidised through the CAP payments system and that those subsidies were increased in the budget after the UK left the EU and will be increased again in the next budget. Then consider that EU industrial electricity costs are lower than those in the UK, so food processing costs are generally lower in the EU. It should be obvious to Andrew Bailey why UK food exports to the EU are less than 30% of UK imports from the EU and why paying to join the EU’s SPS area will not change this.

Low UK food exports have nothing to do with red tape but everything to do with the UK not subsidising farmland, increasing the minimum wage for young workers, increasing employers’ national insurance, and the UK having the highest industrial energy prices in the developed world. The Government could fix all of these issues if it wanted to boost UK growth without paying to comply with EU regulations. Instead, it seems hell-bent on subjugating the country to the EU and is happy to ignore the economic consequences. It is incredible that the Governor of the Bank of England isn’t warning them against this course of action.

Instead, the Bank of England Governor and the Starmer Cabinet seem to be the only people in the UK who didn’t understand the message in the Reform Party’s resounding victory in Thursday’s election. Reform was not elected by a population desperate to let the EU make UK regulations. Reform was not elected by a population that wants to send billions of pounds to the EU, thereby increasing government borrowing. Reform was not elected so that all UK companies will have to spend money complying with EU regulations, even if they don’t trade with the EU.

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p.s. Bailey is correct; Adam Smith did believe that trade promoted economic growth, but in Smith’s lifetime, Britain’s largest trading partners were its American colonies and the West Indies.

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I was delighted to read the Sunday Times editorial headline: ‘Spurning the North Sea’s gifts makes little sense for Britain.’ The editorial correctly claims that the Labour Party’s message on energy is confused waffle: Ed wants to block oil and gas, but Rachel (and the country) needs the jobs and revenue from them. However, the Sunday Times is just as confused. Towards the end of the editorial promoting oil and gas development, we read: ‘Nobody should doubt that our long-term future lies with renewables.’ This is the same newspaper that has a story on its front page about how a shortage of jet fuel could disrupt summer holiday travel.

This level of cognitive dissonance may be the Sunday Times’ editorial team hedging its bets in case Ed Miliband becomes Prime Minister in May, or perhaps they are preparing for a Green Party Prime Minister after the next election. Either Way, they should be aware that renewables only produce electricity, and sporadically at best, while over three-quarters of UK energy consumption comes from oil and gas, NOT electricity. The obvious and topical example is jet fuel.

There is really no reason why the UK’s future should lie with renewables made in China using coal when the UK has ample supplies of oil and gas. Unfortunately, people have been talking about net-zero carbon emissions for so long that they appear to have forgotten how it is measured, what emissions are not counted, and why this process is nonsense. So I thought it would be worth reviewing exactly what the UK’s reaching ‘Net Zero’ means for the Earth’s atmosphere.

1. Which emissions are counted

The United Nations Framework Convention on Climate Change (UNFCCC) requires countries to produce national greenhouse-gas inventories in accordance with the Intergovernmental Panel on Climate Change (IPCC) Guidelines. This covers the gases that must be counted, which sectors must be included, how to measure emissions and removals, and how to treat land uses, forests, peatlands, agriculture, industry, energy, and waste. All countries must submit their greenhouse gas inventories to the UNFCCC.

UNFCCC’s emissions accounting standards solely concentrate on the greenhouse gas emissions, which are considered by the UN to be ‘man-made’. So they don’t count natural emissions released from oceans, volcanoes, swamps and bogs, or wild ruminant animals. And they strangely also don’t count the most obviously ‘man-made’ source of CO2 – the 1 kilo of CO2 each person breathes out each day.

2. Territorial emissions, but not imported emissions

The UNFCCC is only interested in a country’s national territorial emissions. That means they also don’t count the emissions from imported goods, international investments, goods made in offshore factories owned by UK companies, nor international shipping and aviation that is not allocated to the UK.

This has allowed the UK to claim it has halved its CO2 emissions since 1990. In reality, successive governments have simply made UK manufacturing uncompetitive by imposing higher carbon taxes than those in other EU and Asian countries, forcing UK manufacturers to either go out of business or to move their factories offshore.

While claiming to have cut UK annual CO2 emissions by almost 300 million tonnes in 2024, the UK imported goods whose manufacture emitted about 180 million tonnes. Emissions reductions have just become a bait-and-switch strategy.

Manufacturing’s share of UK GDP has halved since 1990, from 16% to just 8%, as have UK carbon dioxide emissions, not due to a successful Green transition but to simple deindustrialisation. The speed of this decline has increased since 2019; the UK has lost an estimated 150,000 to 200,000 industrial jobs due to deindustrialisation and high energy prices, with the steepest declines in energy-intensive sectors such as steel, chemicals, ceramics, and paper.

The Chart above shows the UK’s annual net trade emissions, that is, the emissions from goods imported each year by the UK minus the emissions from goods exported by the UK. The data comes from Our World in Data, which has tabulated it from Eurostat, OECD, IMF, World Bank and Global Carbon Budget data. In total, since 1990, cumulative emissions from UK net trade exceed 5 billion tonnes, but these aren’t included in the UK’s UNFCCC emissions measurements.

3. Global emissions are not dropping

Since 1990, over a trillion tonnes of CO2 emissions have been put into the Earth’s atmosphere. Most of this has come from developing countries that are happy to supply the UK and Europe with the goods they no longer make because of their obsession with cutting their territorial emissions and reaching Net Zero. The exact cumulative Global emissions between 1990 and 2024 are 1,064,765,046,000. If the UK had not reduced its cumulative territorial emissions by 289,039,560 over the same period, global emissions would have been 1,065,054,085,560. Both numbers round to 1.065 trillion.

The chart below clearly shows that the UK’s deindustrialisation has made absolutely no difference to global emissions; the red area at the bottom of the chart shows the UK’s emission reduction – it is barely visible. And for readers unfamiliar with scientific notation: 1e12 is 1 followed by 12 zeros, i.e. 1,000,000,000,000 tonnes.

4. Both Europe and the world need more oil and gas, not less

The UK is one of about 40 nations with ample oil, gas and coal suppliers. This is a valuable resource that should be used domestically or exported. Hopefully, in resolving the current Labour Party energy confusion, Team Rachel will win the day: The UK’s economy could really use the boost that additional employment, tax revenue, and export revenue from increased oil and gas production would bring. The world could also really use additional supplies of oil, gas, and coal from outside the Persian Gulf. This is especially true of the EU, which has very little domestic oil, gas, or coal, and is already our largest export market for crude oil and is connected to the UK by pipeline for gas transport. So why isn’t the UK prepared to increase its production and export its resources, even to Europe? The government wants to let the EU set UK rules, but isn’t prepared to help the EU during its energy shortages. When the commentariat states that oil and gas are sold on international markets to the highest bidder, they ought to also investigate which countries are the highest bidders.

Restricting the development of new oil fields in the vain belief that this is helping to reduce global carbon dioxide emissions benefits no one: not the potential workers extracting the coal, gas and oil, not the exchequer collecting the tax, and not the global emissions which have increased by over one trillion tons since 1990 - the reference year used by the UK in its Paris Agreement Commitments to reduce CO2 emissions.

5. UK emissions targets have helped the developing world

The UK’s 300 million tonne annual CO2 reduction is invisible when compared to the global increase. The main result of the UK’s efforts has been to export its emissions to countries without carbon taxes and environmental restrictions on their industry. The imported goods from these countries have 180 million tonnes of associated CO2 emissions. So, the UK has only reduced its emissions by 120 million tonnes, mainly by converting coal-fired power plants to gas-fired ones. This happened in the 1990s, long before the Paris Agreement was signed in 2015, and was done for commercial reasons rather than environmental ones. Cynically, I suspect this commercially inspired emission reduction may have been why the UK wanted to measure its emissions relative to 1990 in the Paris Agreement.

The Paris Agreement is a strange agreement that allows every country to set its own emissions targets and reference date. And not all of the targets were reductions. For example, China’s Paris Agreement target was to reach peak emissions around 2030; it did not set a reduction target.

But the Paris agreement has had some positive outcomes for global trade, as developed nations such as the UK, which wanted to virtue signal their CO2 reduction credentials, helped developing nations industrialise by importing their goods. These imported goods were relatively cheaper, so consumers in developed nations also benefited, and they were “emission-free” from a UNFCCC perspective. The resulting industrial development has probably done more for the world than reducing CO2 emissions ever could have.

Of course, not everyone benefited. Many workers in developed nations lost their jobs as factories were moved to Asia, Africa, and Latin America to avoid CO2-emission taxes and penalties. For more information about this, the Great British Business Council’s paper, Premeditated Industrial Destruction, explores how and why the UK destroyed its industries and how to reverse this.

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This week, the former Green Party MP, Caroline Lucas, demonstrated on Good Morning Britain how little she knows about energy, trade, and oil and gas production. The Green Party is so proud of this exchange that they clipped it and posted it on X. Another commentator has posted a longer clip.

So what needs rebutting:

Myth 1. It’s not worth recovering because ‘we export 80% of the oil’

GMB presenter: ‘what we do get out, we export 80% of...’

Lucas: ‘Exactly because the oil, for example, that we get out is not the kind of oil we use in our refineries. So it’s not going to do anything.’

Lucas and Garaway will no doubt be surprised to learn that 80% of the cars produced in the UK are also exported. Car exports provide many skilled jobs in the UK, both directly and indirectly through the production of materials, parts, and services, as well as providing tax and export revenue. Which is probably why no sane person has ever claimed on breakfast television that the UK should stop producing cars because ‘we will only export them’.

It is true that companies operating on the UK side of the North Sea do ‘export’ about 80% of the crude oil they extract to refineries in Rotterdam, Poland and Germany. This is probably because Rotterdam has a larger refining capacity than the entire UK; Rotterdam refineries are the largest and most modern in Europe and are configured to refine light, sweet crude efficiently as well as other crude grades. The majority of UK North Sea production is light sweet crude. Incidentally, the two largest refineries in Rotterdam are owned by Shell and BP, both UK companies. They refine about 400,000 barrels a day each, while the largest UK refinery refines only 270,000. So this isn’t quite the ‘export’ the Greens like to imply, more of an internal company transfer, and a lot of the resulting refined products: petrol, diesel and jet fuel, will come back to the UK, and some will be sold in Shell and BP service stations.

The four main Rotterdam refineries

Polish refineries are now the UK oil company’s second-largest customers, following Poland’s suspension of imports of Russian crude via the Druzhba pipeline. Poland’s refineries are state-owned, a legacy of Poland’s Soviet past, which allows them to circumvent the EU’s state aid rules, but the Polish government believes that refining capacity is a national security asset, so its refineries operate on narrow margins. I wonder if Lucas would prefer that Poland continue to import Russian oil instead?

At least 60 countries have introduced emergency measures due to fuel shortages caused by the closure of the Strait of Hormuz and by damage to LNG plants and refineries in Bahrain and Qatar. Only the UK’s smug middle-class ‘Greens’ would object to exporting oil to these countries. But no doubt the same Greens will organise a charity concert for them after their populations are starving and unemployed.

Myth 2. The North Sea ‘is a declining basin’

Lucas: ‘We don’t have 100s of years’ worth of oil and gas left in the North Sea, it is a declining basin’ and ‘In spite of all the licences that have been given out over the last 14 years or so, we are still getting a tiny amount from the North Sea.’

Interestingly, according to the UK’s trade data, Norway is the largest supplier of crude oil to UK refineries, accounting for about 40% of UK crude imports. Obviously, the North Sea cannot be the ‘declining basin’ the Greens like to claim if the Norwegian side is supplying 40% of UK oil imports and 75% on UK gas imports. According to the Norwegian Offshore Directorate, in 2025, there were 21 new oil and gas discoveries across the Norwegian shelf, totalling 424 million barrels of recoverable oil and gas. About two-thirds of these were new oil fields, and one-third were new gas fields. There was also a new discovery in January 2026 with up to 4.5 million cubic metres of recoverable oil equivalent. This is hardly a declining basin.

The difference between the UK and Norwegian sides of the North Sea is that the Norwegian government encourages oil and gas exploration and development, while the UK government seeks to prevent it. UK production has been declining since the Windfall Tax was introduced, which increased the total tax rate on oil and gas companies to 78%. It shouldn’t surprise anyone that companies are choosing to keep their oil under the UK side of the North Sea and focus on their production in other parts of the world.

Myth 3. The purpose of production is to lower prices

Lucas: ‘We need to knock on the head the idea that drilling more oil and gas is going to get our own prices down, our own fuel prices down,… because it is sold on international markets at global prices, so it doesn’t do anything for our own prices.

Just like oil companies, car companies are private companies, and if they want to invest in plant and equipment in the UK, they are free to do so, and if they can make more vehicles than needed or wanted by UK consumers, they are free to export cars to countries where consumers do want to buy them. This really isn’t rocket science.

Not only does the UK export 80% of the cars it produces, 85% of cars purchased in the UK are also imported. So, the car market resembles the oil market more than people may imagine. Consumers buy the cars they want, need or prefer, just as oil refineries buy the oil that suits their refinery’s configuration and production.

North Sea oil is produced by private, mostly listed companies, and, like all listed businesses, they have a fiduciary duty to maximise their profits. So, if refineries in Rotterdam are willing to pay more for UK oil than UK refineries are, UK producers will sell to them. If oil production companies also own refineries in Rotterdam, such as BP and Shell, they are even more likely to sell their oil to them, though they are not obliged to do so. Crude sales are determined by grade and end product demand. For example, if a UK refinery has clients who need bitumen, it will buy heavy sour crude oil to produce bitumen. This crude will probably be imported from Saudi Arabia, Mexico, or, possibly, Venezuela.

This is why people trade: to get the products they need or want at a price they can afford. Trade is determined by importer demand. But importantly, imports are paid for by exports. Producing cars, aircraft parts, chemicals, pharmaceuticals, and oil for export helps the UK’s trade balance. However, the UK is still running a trade deficit, which could be reduced if it develops new oil production.

Gas is completely different: the UK can only export gas to countries connected to it by pipeline; the UK does not have a plant to convert natural gas to LNG, as I have explained many times. You can read about it here. But producing more gas in the North Sea does increase UK gas security and reduce the UK’s need to import gas from Norway or LNG from the US. This also helps the UK’s trade balance. But if US LNG is cheaper than UK natural gas because the US keeps finding and opening new wells, don’t be surprised if the UK keeps importing it.

Myth 4. Energy security will come from renewables

Lucas: ‘if we want to get more energy sovereignty, we need to be going even more for the renewables,’ and energy security is ‘done more cheaply and more effectively through renewables,’

Like so many people, Lucas is confusing energy with electricity. They are not the same things. Three-quarters of the UK’s energy needs are supplied by oil, gas, and coal. Renewables only supply electricity, mostly intermittently, so they also need backup electricity made from gas. Energy sovereignty or energy security will not come from more renewables, and renewables are not cheaper.

Renewable electricity cannot supply petrol, diesel, jet fuel, bunker fuel, heating oil, bitumen, carbon fibres, or chemical feedstocks for plastics, fertilisers, and pharmaceuticals, or the industrial heat needed to produce cement, ceramics, glass, steel, or aluminium.

Renewable intermittent electricity is heavily subsidised, but also requires stand-by backup power. Intermittent electricity increases the cost of balancing the grid, as it is unpredictable, requiring curtailment payments when the wind is too strong or there is too much solar electricity. Solar is difficult to curtail; so other suppliers are required to shut down. Intermittent electricity also increases the Transmission Network Use of System costs, as wind turbines are often located far from demand centres.

It is a beautiful, sunny day today, 19th April 2026, but at 6 pm, only 9.4% of UK electricity is coming from solar, 11.8% from wind, 28.9% from gas, and 22.1% from continental Europe. In an hour, gas will have to be ramped up to replace all the solar and to cover the additional demand from people turning on their lights.

Myth 5. If the new fields can’t supply total UK demand, they shouldn’t be allowed to supply any

Lucas: ‘new fields like Jackdaw and Rosebank will take years to come online,’ and ‘All of the new fields licences given out by the Conservatives will only produce 6 months of UK gas demand’

Jackdaw was granted permission in 2022 and was preparing for production by Q3 of 2025, but its permission was called into review in January of that year. If Ed Miliband supports the project, they could be in production very quickly as Shell has already drilled the wells, installed a platform support structure and laid a ‘tie-back’ pipeline to Shell’s Shearwater site. So, the physical production was over 90% complete. However, production could be delayed by UK Red tape: the requirement to resubmit their updated environmental assessment, triggering new statutory consultation before receiving approval from the North Sea Transition Authority. It is no surprise that oil and gas companies are fed up with dealing with the UK. It is hard to believe there is an international gas shortage due to damage to the Qatari LNG plant when you read about the UK gas approval processes. But if the Jackdaw site does take ‘years to come online’, this is entirely down to UK politicians and green activists, not to any structural issues.

But why does Lucas claim that the new fields would only supply 6 months of UK demand, and so there is no point in allowing them? This statistic is false. It comes from ‘Uplift’, an activist group hell-bent on closing down North Sea oil and gas (from their nice warm office). Uplift apparently only counted the gas licences approved in the 33rd licence round, then claimed these licences would produce only 40 to 50 bcm of gas, when the UK uses 75 bcm annually. The North Sea Transition Authority (NSTA) believes the new fields from the 33rd licensing round would supply 12 to 18 months of UK demand, and this is from only one licensing round. NSTA believes there are reverse of between 560 and 1000 bcm remaining in the UK continental shelf.

But regardless of the amount of reserves, if a private company wants to buy a licence to explore the UK’s continental shelf for oil and gas reserves and then is willing to pay the UK 78% tax on its profits, why would we want to stop this? We don’t subsidise oil and gas companies, unlike wind and solar production. So, where is the downside?

There are 106 companies in the Oil and Gas Producers sector listed on the London Stock Exchange (LSE), according to the Barclays Smart Investor sector list. These range from massive vertically integrated companies such as Shell and BP, smaller North Sea independent producers such as Harbour Energy, and small-cap explorers and AIM-listed firms. This number includes nine major producers with dual listing on the LSE, such as TotalEnergies, Equinor, Eni, Marathon Petroleum, Occidental Petroleum and Repsol. There are also companies in related sectors, such as Oil Equipment and Services, Pipeline Operators, and Refiners & Petrochemical Companies, listed on the LSE. In total, 362 companies in the oil and gas industry are listed on the LSE. Even if the companies export the oil they find, UK investors benefit. If the companies are UK tax residents, as BP and Shell are, they will pay corporation tax on their worldwide profits. Only smug middle-class greens would want to limit this industry.

The UK needs oil and gas and will buy it from somewhere, so why not produce it? Even if the oil produced is exported, the UK still gains employment, licence fees, and tax revenue. It would also help our trade balance. If we don’t export it but use it domestically, it will reduce UK imports and again help the UK’s trade balance.

But the idea that we should not allow a company to mine in the North Sea because we don’t think there is enough to provide all of the UK’s gas demand is bonkers. The UK currently has about 80 producing gas fields – none of them provides all of the UK’s needs, but together they provide half of it. Why would we not allow more companies to add to this supply?

Myth 6. UK oil and gas production is harmful to the environment, but imported oil and gas isn’t

Lucas’s on climate change: ‘There is a real risk of all kinds of shortages and all kinds of vulnerability because of what we are doing to our global environment.’

The only difference between the emissions from domestic oil and gas production and imported oil and gas is the emissions accounting standards set by the United Nations Framework Convention on Climate Change (UNFCCC) and the Intergovernmental Panel on Climate Change (IPCC), which established the rules for how and what is counted as part of a country’s territorial emissions. The UK has only done 3 things that made a difference to its territorial CO₂ emissions:

1. It replaced coal-fired electricity with gas-fired electricity, halving emissions.

2. It reduced its methane emissions from the waste management sector by 71% between 1990 and 2019^[1] by improvements in landfill standards, changes in the types of waste sent to landfills, and increased use of landfill methane for energy.

3. It deindustrialised by taxing and regulating emission-intensive industries, prompting them to move their manufacturing out of the UK. The UK continued to import the goods it used to make, resulting in 180 million tonnes of CO₂ emissions in 2023, but these emissions are not counted as UK emissions by the UNFCCC.

For Lucas to claim to be worried about climate change while the UK continues to import goods that emit 180 million tonnes of CO₂ somewhere else is untenable. Since 2019, the UK has lost between 150,000 and 200,000 industrial jobs due to deindustrialisation and high energy prices, with the steepest declines in energy-intensive sectors such as steel, chemicals, ceramics and paper. But soon, if Lucas and her ilk have their way, thousands of oil and gas workers will be joining them.

Global emissions have increased by over a trillion tonnes since 1990. UK territorial emission reductions total just 290 million if we exclude UK imported emissions and pretend UK emission reductions are real. This is just 0.03% of the global increase. Lucas is very wrong to talk about shortages and vulnerabilities because of what we are doing to our global environment.’

‘We’? The UK has not produced an additional trillion tonnes of CO₂ emissions since 1990. ‘We’ are not the problem, nor, I suspect, are CO2 emissions – if they were, the massive increase should have made the harms very obvious by now.

The rest of the world has moved on. Even Germany’s Minister for energy and economy, Katherina Reiche, told a major oil and gas conference, CERAWeek in Texas, that the European Union should loosen its “rigid” adherence to climate neutrality and allow itself to miss its 2050 net-zero goal by up to 10%. Reiche stressed that economic growth must come before green targets, stating correctly that Germany and Europe can’t afford to lose their energy-intensive industries. She also told the Texas audience that Germany should drill for fossil fuels in the North Sea, saying: “We have a gas field in the North Sea, which we don’t want to explore. I think we can’t stick to this attitude. We have to also go into our own reserves.” To back this up, Reiche has unveiled plans to build new gas power plants, scrap Germany’s gas boiler phaseout, remove subsidies for rooftop solar panels, and deprioritise the connection of renewables to the country’s power grid.

It is time for the UK and the Green Party to move on as well.

For more information about how Net Zero is measured, the potential of the North Sea to provide the UK with energy security, employment and tax revenue, read the Great British Business Council’s paper, Premeditated Industrial Destruction.

[1] BEIS, Feb 2021, 2019 UK Greenhouse Gas Emissions, Final Figures

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While I was delighted to see X posts from the former Conservative Party Minister for Energy Security and Net Zero claiming the Conservatives would axe ‘the’ Carbon Tax, I hate to break it to them, but there is more than one. Just as with the mythical ‘global oil price’ and the mythical ‘international gas price’, there is no single UK Carbon Tax; there is not even a single carbon tax on electricity production. The UK has 3 carbon taxes on electricity and at least 19 different taxes, charges, levies, and duties on energy, as well as financial regulations that have increased the cost of all types of energy.

Scrap the carbon tax – but which one?

The three UK carbon taxes on electricity, any one of which could possibly represent ‘The Carbon Tax’ on electricity in the eyes of the Conservative Party, are:

1. The Emissions Trading Scheme (ETS) requires certain companies to buy allowances to cover their CO2 emissions. Not all industries and activities are covered by the ETS scheme; however, electricity production from coal, gas, oil and biomass plants definitely is. The ETS also applies to emissions from energy use and from industrial processes, such as the production of steel, cement, ceramics, chemicals, pulp and paper, and aluminium, whereas emissions from administrative, office, and general business operations are exempt.

   The ETS was introduced by the EU in 2005. The UK should have scrapped it the moment we left the EU. It does nothing but ensure that the UK’s industrial base is replaced by imports from countries without an ETS, such as Japan, Turkey, India, Vietnam, Bangladesh, etc. (I really could go on and on here).

   If you want evidence of how carbon taxes have destroyed energy-intensive industry in the UK, the former DESNZ Minister, Claire Coutinho, included a chart in her X post of the UK’s collapsing energy-intensive industry from Q1 2021 to Q3 2024, but forgot to mention that this period was mostly under Conservative governments, not Ed Miliband. I must also correct her: Ed Miliband has NOT doubled any of the carbon taxes on industry, as the former Energy Minister claims. (Coutinho X post is shown below.)

   

   Unfortunately, the EU built retention of the ETS into the UK-EU Trade and Cooperation Agreement (CTA). So, axing this Carbon Tax might be trickier than the Conservatives imagine. Abandoning the Emissions Trading Scheme would allow the EU to break the CTA if this made UK goods more competitive in the EU market. Luckily, this is unlikely, as the UK currently has a massive goods trade deficit with the EU. UK goods would have to become considerably more competitive before the EU would have a valid case for breaking the trade agreement. To ‘axe this carbon tax’, the Conservatives would just need the political will to stand firm, repeal the ETS, and call the EU’s bluff.

   Even more unfortunately, by the time of the next election, axing the ETS may be more difficult, as the current Labour government plans to join the EU’s even more expensive ETS scheme. Nonetheless, if the Conservatives want to make a substantial difference to the UK’s economic fortunes, this is the carbon tax to scrap. It will not only reduce industrial electricity costs but also help other industries that are currently required to buy ETS allowances for their manufacturing emissions.

2. An easier ‘Carbon Tax’ to axe is the Carbon Price Support (CPS) tax. The Cameron/Clegg coalition introduced the CPS in 2013, supposedly to discourage the production of coal-fired electricity. It is part of the UK’s Climate Change Levy framework and applies only to industrial and commercial electricity users. The last coal-fired power plant closed in September 2024, but this additional £ 18-per-tonne CO2 tax is still being added to industrial and commercial electricity bills.

   This tax was instrumental in the UK’s deindustrialisation, as it made UK industrial electricity more expensive than in other EU countries, which did not impose a similar tax, even though many EU countries relied on coal-fired electricity production. (Nine EU members still rely on coal-fired electricity.) The CPS even made UK gas-fired electricity uncompetitive compared to other EU gas-fired electricity. According to Electric Insights, in the first half of 2021, a British gas-fired power station paid £65 per tonne of CO2 emitted, whereas one in Belgium or the Netherlands paid only €44 (£38) per tonne. The Chemical Industry Association estimates that the CPS adds about £8 per MWh to electricity costs. The Centre for British Progress claims the CPS increased electricity costs by more than £3.50 for every £1 it generates for the Exchequer in 2024. Everyone who pays this tax hates this tax. Politically, it would be the easiest one to scrap.

3. The third choice for ‘the Carbon Tax’ to scrap is the Climate Change Levy (CCL), a tax on business, agricultural, and public-sector energy use, but not on domestic energy use. The CCL varies by energy type and is charged on electricity, gas, LPG and solid fuels. The rates were increased on April 1^st and are now £0.00801 per kWh for electricity, £0.00801 per kWh for gas, £0.02175 per kg for LPG, and £0.06264 per kg for other taxable commodities. The rate will increase again on April 1^st next year - the government’s April Fools’ Day joke on UK industry. While these rates may seem small to a domestic user, many of the businesses that pay this levy use large amounts of electricity.

   There are substantial discounts for Energy Intensive Industries if they are in an eligible product sector, their electricity costs exceed 5% of their Gross Value Added, and they meet the requirements of the Climate Change Agreement. What are these requirements? Commit to the energy efficiency and/or carbon efficiency targets for their industry and demonstrate that they have met the targets over a two-year period, or pay a buy-out fee. The fee was £18 per tonne of CO₂e in 2023 and 2024, calculated as the shortfall between the target and actual emissions, and paid to the Environment Agency. There were several problems with this system, not least that the buy-out price of £18 per tonne of CO2e was considerably lower than the UK ETS carbon prices, encouraging companies to sign up for the scheme but fail to reduce emissions. But there were also problems with verification standards and inconsistent reporting.

   While the CCL is still enforced and the discounts still exist, the buy-out system has now been replaced by a new six-year scheme that started on January 1 2026, and will run until 2033. It has brought more sectors into scope, set tighter targets, and expanded carbon metrics beyond energy efficiency. The monitoring and verification rules have been strengthened, giving the Environment Agency the power to audit reported reductions and ensure they are real.

   However, measuring emissions and complying with the CCA requirements add an additional cost for UK businesses, on top of the taxes added to their electricity, gas, LPG, and solid fuel bills. The added complication of charging a levy, then allowing massive discounts of 92% off the electricity CCL, 88% off the gas CCL, 77% off the LPG CCL, and 86% off the solid fuel CCL, provided companies comply with auditable emission reduction targets, adds another layer of bureaucracy. Paying for the Environment Agency to monitor and audit company emissions is another cost to taxpayers.

An even more destructive tax, but not a carbon tax

But aside from the confusion about exactly which carbon tax the Conservatives are proposing to axe, they have also vowed to increase oil and gas licences, claiming this would boost production, raise tax revenues, and bring down bills. However, more licences will not encourage companies to increase oil and gas production in the UK while the current tax regime is in place.

Besides new licences, the Conservatives would need to scrap the Windfall Tax, which they introduced in 2022 at 25% and raised to 35% in 2023. The Labour government made it worse by increasing it to 38% and reducing the allowances for exploration and development expenses. The Windfall Tax is in addition to the 40% ring-fenced corporate taxes that oil and gas companies already pay on their North Sea production. The Windfall Tax raised the total tax rate on oil and gas companies from 40% to 65%, then to 75%, and now to 78%. Unsurprisingly, production fell as the tax rate increased.

The Windfall tax was designed as a revenue-raising measure rather than an environmental one, unlike the three ‘Carbon Taxes’ discussed above. But it has reduced UK carbon emissions by curtailing oil and gas production. In 2021, the UK produced 38.241 million tonnes of crude oil. In 2022, despite the price spike following Russia’s invasion of Ukraine, UK production dropped to 35.348 million tonnes, most likely due to the introduction of the 25% windfall tax. In 2023, when the windfall tax was increased to 35%, production fell again to 31.102 million tonnes. In 2024, when the tax was increased to 38%, production fell to 28.019 million tonnes. But the UK’s demand for crude oil didn’t change in line with the tax increase; instead, crude oil imports (from countries without a Windfall Tax) increased from 35.58 million tonnes in 2020 to 43.39 million tonnes in 2024. Increasing the UK’s trade deficit.

In addition to the reduction in production, total tax revenue from oil and gas companies has fallen from £9.3 billion in 2022/23 to £2.7 billion in 2025/26. The government had previously claimed to have raised £9.9 billion in 2022/23 from oil and gas taxes, but this figure has been revised down to £9.3 billion, making this ridiculous tax even more ridiculous. It never raised the massive revenues expected when it was introduced; in the OBR’s November 2022 EFO, they predicted tax revenues of £14.9 billion in 2022/23 and £20.7 billion in 2023/24. Instead, the Windfall tax just reduced UK crude oil production, increased crude imports and increased the UK’s trade deficit. It also caused at least one company, Harbour Energy, to cut about 700 employees. Other North Sea operators have announced reduced investment, cancelled drilling, and/or paused their projects.

Without restricting new licences, the Windfall Tax has been instrumental in reducing oil and gas production in the North Sea, and has encouraged some companies to refocus their production in other parts of the world, or even simply other parts of the North Sea, such as the Norwegian part.

So, while I fully support the Conservatives’ announcement that they will end Labour’s ban on new drilling, they will also have to remove the Windfall Tax and reinstate the tax allowances if they are to increase oil and gas production in the North Sea.

Temporary taxes made permanent

While they are at it, the Conservatives should also pledge to scrap the Oil and Gas Price Mechanism (OGPM) that is due to replace the Windfall Tax in 2030. The OGPM will be a permanent tax of 35%, applied to UK oil and gas firms operating in the UK and the UK Continental Shelf, and will be charged on the realised price a company receives above a threshold price of £90 per barrel for oil and 90p per therm for gas. This tax will also be in addition to the ring-fenced 30% Corporate Tax and 10% Supplementary Charge paid by UK oil and gas companies. The threshold prices are not indexed and will be set manually by the government each year. The OGPM will become active if the EPL ends earlier than 2030 due to two consecutive quarters of low oil and gas prices.

Charging an additional 35% tax on a commodity when prices are high completely misunderstands how the price mechanism works. Commodity prices move with supply and demand. When prices are high, supply increases, lowering prices. If the government increases the tax rate when prices increase, there will be less incentive for companies to increase supply, or at least less incentive for them to increase supply in the UK, and we will be back to the situation we find ourselves in now: high oil and gas commodity prices but low UK oil and gas production, investment and employment. And almost no tax revenue from oil and gas production.

More information

If you want to know more about the many taxes, levies, charges and other restrictions that the UK applies to its oil and gas, electricity, and other manufacturing industries, and how this has harmed the UK economy, read the Great British Business Council’s new paper, entitled “Premeditated Industrial Destruction: How the UK destroyed its industries and a plan to reverse this.”

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1. ‘Margaret Thatcher “sold off” or “gave away” the UK’s oil and gas

Variations of this claim have been repeated on social media and in TV and Radio interviews since the conflict in the Persian Gulf started. It is wrong on many levels:

Firstly, neither Thatcher nor any other UK government ‘sold off’ the UK’s oil and gas resources. In 2002, the Labour government under Tony Blair abolished royalties on the volume of oil and gas extracted and replaced them with taxes on profits. The government also issues and charges for licences to explore and develop the UK’s territorial waters and continental shelf for oil and gas, as well as build pipelines to the UK’s coast, etc.

The UK certainly does not knowingly give away the UK’s oil and gas, either. The taxes on oil and gas company profits are over three times those of other UK companies, and oil and gas companies have fewer allowances than other companies. Should a company be lucky enough to find oil and/or gas, they have to pay a Ringfenced corporation tax of 30% and an additional Supplementary Charge of 10%, and finally a Windfall Tax (the Energy Profits Levy) of 38%, taking their total tax rate to 78%.

The details of these taxes are below: they come from my recent paper for the Great British Business Council, entitled Premeditated Industrial Destruction? How the UK destroyed its industry and a plan to reverse this.

Ring-fenced corporation tax (RFCT) of 30%

These taxes are charged on ring-fenced profits from oil and gas produced in the UK and the UK Continental Shelf. Ring-fenced profits are those that cannot be reduced by losses from other parts of the company. This 30% tax rate was intended to ensure the UK government received a fair share of returns from the UK’s natural resources. The standard UK corporate tax rate is currently 25%.

The Supplementary Charge (SC) of 10%

The 10% Supplementary Charge was introduced in 2016 and is also applied to ringfenced profits, but without a deduction for financing costs. However, the SC permits deductions for the Investment Allowances, Cluster Area Allowance, and Onshore Allowances. The Cluster Area allowance was introduced in the Finance Act 2015 and provides a 62.5% deduction on qualifying expenditure incurred in a designated Cluster area. So far, there is only one cluster area: the Culzean Cluster Area in the North Sea.^[1] The Onshore Allowance was introduced in the Finance Act 2014 to support the development of onshore oil and gas projects and allows 75% of capital expenditure to be deducted. The Investment Allowance is currently 62.5% of investment expenditure.^[2]

Energy Profits Levy (Windfall Tax)

Introduced following the Russian invasion of Ukraine as a temporary tax on the ‘Windfall profits’ of oil and gas companies. Originally set at 25% for 3 years, the EPL has been increased and extended twice and is now 38% through to 2030. The 29% investment allowance has been removed, and the decarbonisation investment allowance has been reduced to 66%. After its expiry in 2030, the windfall tax will be replaced by a permanent tax. The EPL will expire before 2030 if the 6-month average price for both oil and gas is at or below the Energy Security Investment Mechanism threshold of £71.40 per barrel of oil and £0.54 per therm for gas.

The UK Government also charges offshore licence holders an Oil and Gas Levy, whether the licence is in production or in pre-production.^[3] This is paid annually to the North Sea Transition Authority (NSTA). They also charge fees for pipeline authorisations, offshore gas storage licences, CO2 storage licences, and pollution prevention and control.^[4] The NSTA also charges fees for licence applications, drilling consents, pipeline works, consent to extend a licence, or to amend a work program approval.^[5]

2. ‘Laffer Curve isn’t real’ – oh, yes it is!

The UK government now takes more money from North Sea oil and gas profits than the companies that do all the work and make major investments in exploration, plant, and equipment. Or at least it used to. Now, with tax rates so high and restrictions on new wells so tight, most companies operating on the UK side of the North Sea are closing down or reducing their production, while UK crude imports are increasing.

The OBR’s March estimate of revenues from all three oil and gas taxes mentioned above was estimated at only £200 million in 2028/9 and expected to drop to just £100 million in 2029/30.[6]

In 2022/3, the Government raised £9.3 billion in oil and gas tax revenues. The 25% windfall tax was introduced at the end of May 2022 and was due to expire at the end of 2025. Instead, just over 6 months later, the tax was increased to 35% and extended until the end of March 2028. In November 2024, it was increased to 38% and extended to 2030. Consequently, revenue collected fell from £9.3 billion in 2022/23 to £5.5 billion in 2023/24 to £ 4.4 billion in 2024/25, and the OBR expects the 2025/26 oil and gas tax revenues to drop to £2.7 billion.

To put that into perspective: Norway collected NOK 373.1 billion in oil and gas taxes in 2025, equivalent to around £28.8 billion, while the UK raised just £4.4 billion in 2024/5 despite owning a much greater proportion of the North Sea fields. If we include Norway’s States Direct Financial Interest (SDFI) income, environment fees, and Equinor dividends, the total Net Norwegian government petroleum cash flow in 2025 was NOK 655.8 billion (£50.7 billion).^[7] Why the disparity? Norway encourages more production and invests in that production, so it makes more money from it. I discuss this in more detail in point 5.

3. “If we produce more oil and gas, it will just be exported.”

I have explained before why this is nonsense for North Sea gas: the UK does not have the facilities to convert natural gas to a liquid and transport it anywhere. the UK can only export gas to countries connected to the UK by pipeline. Converting gas to LNG requires specialist equipment and is a very expensive process, so it is only financially viable if the natural gas is relatively cheap to start with. Unless the UK increases its gas production as dramatically as the US did after its shale gas revolution, which lowered US natural gas prices to a quarter of their former price, it is unlikely that the UK will ever be a commercially viable place for a company to spend about $6 billion building an LNG plant, as Norway and Russia have done. Building an LNG plant in the UK would have been an exceptionally risky investment under the current and previous governments, who did and continue to do everything possible to discourage UK oil and gas production.

But you may ask: What about oil? It can be easily transported. This is true. North Sea crude is sold on the open market and typically goes to UK, Dutch, German and Scandinavian refineries. Refineries purchase different grades of oil based on price, availability, transport costs, product demand, and their refinery configuration (as discussed here). But that doesn’t mean that once the crude oil reaches a Dutch, German, or Scandinavian refinery, the UK market will never see it again. The UK remains a major buyer of European refined oil products, especially diesel.

Two of Europe’s largest refineries are in Rotterdam: one is owned by Shell and the other by BP. Neither company has a refinery in the UK despite both being UK-listed companies. This is why UK trade with the Netherlands appears disproportionately high, given the country’s population: we export crude oil to them and then import refined products, such as diesel, back.

The UK now has only four refineries, all of which have deepwater ports and import various grades of crude from international oil fields. It is strange that so many commentators seem to think that the UK should restrict exports of its North Sea production but expect UK refineries to be able to import as many different grades of crude as they need from other countries.

The only UK or European refinery that primarily used UK North Sea Crude was the recently closed Grangemouth refinery because the Forties pipeline system brings crude from dozens of UK North Sea fields to the Kinneil Terminal, which is part of the Grangemouth complex. Although Grangemouth also imported international crude oil via the Finnart Ocean Terminal, which is connected to Grangemouth by a pipeline across Scotland.

North Sea crudes tend to be light, sweet crudes that are more suited to petrol, diesel, jet fuel, and naphtha production. The UK’s four remaining refineries were all built mainly between 1950 and 1970, before the development of North Sea Oil and when most UK vehicles ran on petrol. Now, diesel demand is higher, as car owners were encouraged to switch to diesel in the early 2000s to lower CO2 emissions, and larger trucks, machinery, and farm equipment are mainly diesel-powered. Most EU refineries are configured to produce more diesel, as there are more diesel cars on the continent, so demand for diesel is higher.

Exporting crude oil and importing refined products is no different from any other type of trade. For example, the UK exports milk to Ireland and imports butter and cheese from Ireland, without activists complaining that there is no point milking any more cows once domestic demand has been satisfied. The fact that some North Sea oil will be exported is not a valid excuse for preventing companies from producing it; it may be exported, but so what? UK refineries also import other types of crude oil from other countries.

4. Imported LNG is interchangeable with natural gas - oh no, it isn’t!

Before the recent conflict in the Persian Gulf, imported US LNG could be landed in the UK for about the same price as North Sea natural gas, so it is a mistake to suggest that the UK is importing ‘more expensive’ LNG. However, Norwegian gas and LNG imports impose a significant opportunity cost: the UK economy misses out on tax revenues and high-paying regional jobs, while incurring an increased trade deficit.

Environmentalists opposed to North Sea gas production should also note that LNG wastes a lot of energy. Using UK North Sea natural gas is better for the global environment, although it is counted as a UK territorial emission by the UNFCCC rules. Natural gas requires less energy to produce and provides the UK with a secure supply of gas for domestic heating, electricity generation, industrial heat, and as an input for fertiliser and chemical production. Again, I quote from the GBBC paper:

‘Besides the obvious financial benefits of using natural gas from the North Sea: increased tax revenue, increased regional employment and an improved Balance of Payments, there is also an energy bonus. The highest Energy Return on Energy Invested (ERoEI) is achieved from a conventional gas field. The ERoEI is between 20:1 and 28:1. That means we get over 20 times as much energy out of a natural gas field as we put in to extract the gas. However, imported LNG has a dramatically lower ERoEI. The liquefaction process consumes about 10% of the gas’s energy, and the shipping fuel and regasification further reduce the energy returned. Imported LNG has an ERoEI of less than 10:1. Importing LNG from the US only makes financial sense because fracking in the US has lowered the US gas prices so much that there is still a financial gain after converting it to LNG and transporting it across the Atlantic.’

5. ‘Norway mines its own resources’ - oh no, they don’t!

Some media commentators, MPs and environmentalists seem to believe that Norway is like some developing or despotic countries with full state control of its oil and gas operations. That is not how the Norwegian system works. There are no besuited Norwegian public servants working on oil rigs in the North Sea. The Norwegian government, like almost all other countries, sells exploration and production licences to commercial oil and gas companies and then taxes their profits after allowing them to expense their exploration and development costs (unlike the UK).

Norway collected 7 times more in taxes from oil and gas companies than the UK in 2025, because it encourages oil and gas production. And I am not including the income Norway receives from the State Direct Financial Interest (SDFI), which holds direct stakes in more than 40 producing fields, accounting for about 30% of Norway’s total oil and gas reserves. The SDFI does not automatically take a stake in all new fields; instead, new licences are awarded through competitive licensing rounds and awarded by the Ministry of Energy. Consequently, many licences are owned and operated entirely by private companies. There are 24 different oil and gas companies operating on the Norwegian continental shelf, including Aker BP, Var Energi, Shell, TotalEnergies, and ConocoPhillips.

Although Equinor started life as the state-owned Statoil, it never had exclusive rights over Norway’s oil and gas resources. Norway has always used a licensing system for companies operating in its waters, as almost all other countries do. Equinor was partially privatised in 2002 and listed on the Oslo and New York stock exchanges. The Norwegian government still owns two-thirds of Equinor’s shares and collects dividends as well as taxes. Once upon a time, there was a law that Statoil had to own 50% of all licences in Norwegian waters, but that rule was dropped by 1985. Equinor is now a commercial company and must bid for Norwegian licences along with other oil and gas companies. It also operates in 36 countries, including on the UK side of the North Sea.

6. ‘Renewable energy can replace oil and gas.’ Oh no, it can’t!

It is hard to fathom how this got past the FT’s eagle-eyed editors, but it did. According to the FT:
‘More than 65 leading UK scientists have warned against new oil and gas drilling in the North Sea, urging the government instead to prioritise renewable energy as a more cost-effective response to the energy crisis.’

At the time of writing, no amount of ‘renewable energy’ can replace jet-fuel, petrol, diesel, bunker fuel, or heating oils. Nor can renewable energy produce the industrial heat needed to produce cement, ceramics, glass, steel, or aluminium. Nor can renewable energy replace the hydrocarbons needed to produce chemical feedstocks for plastics, fertilisers, and pharmaceuticals. Nor can renewable energy create bitumen for asphalt, carbon fibres, or armaments and ammunition. Yes, some of these products can be recycled, possibly using renewable energy, but we still need the original materials before they can be recycled. Even UK renewable electricity needs a backup plan, and this is also provided by gas. It is surprising that these ‘leading scientists’ don’t know this.

If you want more information about the uses of oil and gas and why the UK needs a secure supply of both, read the GBBC’s new paper: Premeditated Industrial Destruction – How the UK destroyed its industry and a plan to reverse it.

[1] OT21590 - Investment Allowance: Cluster area allowance - HMRC internal manual - GOV.UK

[2] OT21555 - Investment Allowance: Introduction - HMRC internal manual - GOV.UK

[3] NSTA, Industry levy

[4] The Oil and Gas Authority (Levy and Fees) Regulations 2025

[5] NSTA, April 2025, guidance-note-on-fees-and-charges-regime-april-2025.pdf

[6] Oil and gas revenues - Office for Budget Responsibility

[7] The government’s revenues - Norwegianpetroleum.no

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It seems strange that I have to explain this now. I would have thought that the recent events in the Gulf would have made it obvious, even to BBC journalists and UK politicians, but it seems not. So here it is: there is no such thing as a global oil price, nor is there a single grade of crude oil.

Like gas (see last week’s Substack), crude oil varies by chemical characteristics, and its prices are determined by demand for that grade of crude and by transport and insurance costs from source to destination.

Crude oil varies in density and sulphur content.

Density is mass per unit volume and is measured by the American Petroleum Institute gravity (API Gravity) at 60^oF, which indicates how heavy or light the Crude is compared to water. Lighter oils have a higher API, and heavier oils have a lower API. Water has an API of 10°; if a crude’s API is below 10°, it sinks in water. Light crude has an API above 31°, Medium crude is between 22 and 32°, and Heavy crude is less than 22°, while extra heavy crude/bitumen has an API below 10°. Refined Lighter oils yield more petrol and diesel, so are generally more valuable. They are also cheaper to transport as they flow more easily through pipelines.

Sulphur content determines whether crude oil is classed as sweet, low Sulphur, medium sour, or heavy sour, which has a high sulphur content.

• Sweet crude ‘cracks’ cleanly, has a higher yield of premium products such as petrol, diesel, jet fuel and naphtha. It is cheaper to refine because it requires less desulphurization, less energy to refine, lower emissions during processing, is less corrosive, and is easier to transport, as it flows easily through pipelines even in cold climates.

• Medium sour is usually cheaper than sweet crude, refines into a mixture of middle distillate and heavier fractions, is compatible with most fineries, and there is a relatively stable supply, as many countries export it.

• Sour crude is significantly cheaper than sweet crude; it produces fuel oil, gasoil and bitumen as well as petrochemical feedstocks for industrial chemicals. It is harder to transport as it is thick and can be semi-solid at ambient temperatures. It requires complex refineries, is energy-intensive, and requires desulphurization. However, the Sulphur byproduct can also be sold to produce phosphate fertilisers, as well as sulphuric acid used in detergents, plastics, pharmaceuticals, pigments, and dyes. Sulphuric acid is also used in the recovery of copper and nickel from ores, in the production of gypsum for cement and plasterboard, and in the cleaning of silicon wafers. Sulphur Hexafluoride is used in semiconductor fabrication.

Crude oil grades are determined by relative density and sulphur content and vary by well and location, as shown in the US Energy Information Administration chart below. I have highlighted the crudes from the Persian Gulf States, as well as North Sea Brent and West Texas Intermediate (WTI), the two crudes that most UK politicians seem to think are the only types.

Whether they are graded as heavy, medium or light, all of the main Persian Gulf crudes have much higher sulphur content than either WTI or Brent. This is why the closure of the Strait of Hormuz has so many industry commentators worried about a shortage of sulphur for the production of phosphate-based fertilisers and sulfuric acid as much as about a shortage of fuel oils and bitumen.

There are variations in oil grade within a region.

It is surprising that UK politicians think Brent and WTI are the only types of crude, as not even all North Sea crudes are light and sweet. The UK’s Kraken Field produces an ultra-heavy sour crude, the UK’s Forties field produces a light sour crude, while Norway’s John Sverdrup produces a medium sour crude.

The UK’s Kraken field is 125 km east of the Shetland Islands, and it is estimated to have reserves of 137 million barrels of recoverable ultra-heavy sour crude with a Sulphur content of just over 0.5% and a 14°API. A sulphur level of 0.5% is the threshold for classifying crude as sour.

The Kraken field produced 1 million bbl/year in 2019, 8.19 million in 2022, but only 5.74 million in 2023. Commentators will claim that lower production was due to ‘natural field decline’, but the decline also coincides with the introduction of the Conservatives’ additional Windfall Tax of 25% in 2022 and its increase to 35% in 2023. This brought the total tax rate on UK oil and gas companies to 75%. It is hard to believe that this extortionate tax rate wasn’t the real cause of lower production levels.

The UK’s four remaining refineries cannot handle ultra-heavy crude, so Kraken crude has to be sent to specialist refineries in Europe, Asia, or the US Gulf Coast, where they will remove the sulphur to meet ultra-low sulphur diesel standards, petrol sulphur limits, the IMO 2020 marine fuel rules, and environmental regulations.

Location Matters

The chart below compares the cost of various crude prices on March 2nd and March 20th, 2026. The forces of supply and demand are clear to see. You will notice that medium sour crudes from Oman and Dubai, which were trading around $4 below WTI and $10 below Brent on March 2^nd, are now considerably more expensive than both light sweet crudes. DME Oman is now $50 above Brent and $64 above WTI, having increased by 133% since Iran closed the Straits of Hormuz. [BTW Dubai Mercantile Exchange’s Oman crude oil futures (DME Oman) is the largest physically delivered crude futures contract in the world and the benchmark for pricing Middle Eastern exports.]

But Heavy Sour Western Canadian crude and US Gulf Coast High Sulfur Fuel oil were amongst the cheapest crudes on March 2^nd and remain the cheapest on March 20^th, even though their prices have increased by 57% and 56% respectively. The Iranian attacks on the refineries and export terminals of the other Persian Gulf States have pushed up the prices of all types of oil, but the largest increases have been in the grades of crude oil usually supplied by tanker from the Persian Gulf.

Transport is not free, but it also varies by type.

Crude oil is mainly transported by tankers and pipelines. Tankers transport the majority of international trade, while pipelines transport the majority of domestic production to export terminals or domestic refineries. However, there are some notable transnational pipelines:

• The Druzhba pipeline connecting Russian crude oil to Belarus, Poland, Germany, Slovakia, Hungary, and the Czech Republic;

• The CPC pipeline connecting Kazakhstan to Russia and the Black Sea;

• The Baku to Ceyhan pipeline connecting Azerbaijan to Georgia and Turkey;

• The Baku to Georgia pipeline.

• Kazakhstan, Russia (Siberia) and Myanmar all have pipelines to China connecting to Xinjiang, the Pacific export terminal, and Yunnan, respectively.

• North America’s Keystone pipeline and Enbridge Mainline both connect Canadian crude to the US Gulf Coast and the Great Lakes, respectively.

• Middle East pipelines cross Saudi Arabia from Abqaiq to Yanbu on the Red Sea, connect Iraq to Turkey, and connect the UAE to the Indian Ocean port of Fujairah.

• Africa has crude oil pipelines connecting Chad to the Cameroons, Tanzania to Zambia, and a pipeline connecting Uganda to Tanzania is under construction.

• South America has pipelines connecting Ecuadorian and Colombian crude to export terminals on the Pacific coast.

Although transporting oil by tankers is more flexible in terms of supply source and destinations. International pipelines were built to bypass choke points such as the Bosporus, the Suez, and the Straits of Hormuz. The Saudis built their pipeline to the Red Sea 38 years ago; the idea that ‘no one planned for the closure of the Straits of Hormuz after the attack’ is laughable. The Saudis, the UAE, and Iraq have been preparing for this possibility for decades.

Pipelines reduce transport costs, secure supply lines for landlocked producers, and unsurprisingly, enforce geopolitical dependencies. For example, the EU remains dependent on Russian oil and gas four years after its invasion of Ukraine.

Pipelines can be the cheapest way to transport oil if volumes are steady, the terrain is not extreme, and if the pipeline is already built and amortised. Additionally, insurance is much cheaper than tanker transport. Not only have oil prices increased by between 35% and 135%, but Very Large Crude Carrier (VLCC) rates have quadrupled to $800,000 per day, and war-risk insurance premiums have increased by almost 7 times. Pipeline prices that avoid the Straits of Hormuz have also increased as demand for them has grown.

Conclusion – there is no global oil price because there is no single oil grade, and transport and insurance are not free (especially now). Any UK politicians who believe the oil price is the Brent price need to read more commodity reports. (or my Substack)

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I have been busy writing a paper and trying not to get distracted by the media’s lack of knowledge about energy, but this week’s guff from MPs, BBC journalists and self-appointed media commentators was impossible to resist.

First, let’s start with Fiona Bruce, a BBC journalist who has a staff of researchers to explain things to her, who asked a Conservative MP on the Question Time panel on Thursday:

‘If North Sea gas is sold on the International Market, how does drilling more make the UK more secure?’

The hapless Conservative MP, Harriett Baldwin, was sure that drilling would make the UK more secure, but couldn’t explain why, because she doesn’t understand energy markets any better than Bruce. Balwin, like Bruce, also believes there is an ‘international gas price’ and that the UK gets a significant amount of gas from Qatar. At least the Labour MP on the panel, Lucy Powell, knew that the UK gets less than 2% of its gas from Qatar, but even she couldn’t step in to explain where Bruce and Baldwin were going wrong about UK energy security. So here’s my attempt to set them straight:

1. There is no ‘international’ gas price.

Natural gas prices vary with demand at the gas supply location, unless it is connected by pipeline to other areas of demand.

The US gas price at Erath, Louisiana, Henry Hub, is the price used for delivery of the NYMEX (New York Mercantile Exchange) Natural Gas Futures Contract, and is the benchmark for US natural gas prices, BUT, it is NOT the international gas price. The Henry Hub price is currently about a quarter of the UK’s natural gas price. Even before the Iran attacks, it was about a third of the UK price.

There are at least four gas markets in Europe, and even they don’t trade at the same price. The UK’s virtual Natural Gas trading hub, the National Balancing Point (NBP), trades in pence per therm, while the virtual Dutch Title Transfer Facility (TTF) gas price trades in Euros per MWh. If you do the conversion, they trade at a very similar price because the two markets are connected by a pipeline. Italy’s PSV gas price tends to be higher than the Dutch TTF gas price because Italian gas faces higher transport and network costs, as much of it is LNG or via a gas pipeline from North Africa. France also has a national gas market, Point d’Echange de Gaz (PEG), which differs from the TTF price because it has higher LNG exposure, different transmission costs and different regional supply and demand.

2. We are the highest bidder for North Sea gas.

When Bruce claimed on Question Time that ‘UK gas would be sold to the highest bidder’, she ought to know that the highest bidder in Europe at the moment is the UK. This is because it has the least gas storage and has reduced its production by imposing the Windfall tax on production companies.

Roughly 40% of the UK’s total energy consumption is supplied by natural gas, making it the single largest fuel in the UK energy mix, according to DUKES. Yet successive UK energy ministers have never considered building more gas storage to cover shortages. Centrica, the owner of British Gas, owns the Rough gas storage site but claims it is unprofitable and requires major investment to refurbish. Centrica wants the government to pay for this. So until this is sorted, the UK will continue to be the ‘highest bidder’ for our own gas.

3. Gas transport is NOT FREE

There is no ‘international gas price’ because gas is difficult and expensive to deliver without a pipeline, and even pipelines are not free. Gas importers have to pay for a pipeline contract based on the daily capacity of gas delivered. For most European pipelines, transport costs add roughly €1 to €4 per MWh to the cost of the gas, but for long-distance pipelines, such as those from Russia to the EU, it can add €5 to €10 per MWh. Luckily, pipeline costs from Norway to the UK are very cheap because Norway’s Gassco system is non-profit and priced to recover costs only, and there are no ‘transit fee’ charges by other countries traversed by the pipeline, so the cost is between £1.20 and £2 per MWh. This includes the Norwegian exit tariff, Gassco, the UK entry tariff (NGT), the capacity reservation uplift and the commodity charge.

Transporting gas beyond a pipeline is much more expensive, as the gas must be converted to Liquid Natural Gas (LNG). To do this, gas has to be purified, then compressed, then ‘frozen’ to -161°C in specialist plants, stored in cryogenic tanks, transported on specialist ships, then ‘regasified’ again in specialist plants, and finally stored or put into a pipeline (another cost). LNG shipping and regasification can add €5 to €8 per MWh to the gas price.

4. The UK does NOT have an LNG plant

The UK does not have any plants for converting gas to Liquid Natural Gas (LNG), although we do have several plants for regasifying it, including Grain LNG, the largest regasification terminal in Europe. So Bruce’s claims on Question Time that UK natural gas would be ‘sold on the international markets’ to ‘somewhere else’ are again wrong. The UK can ONLY sell gas to countries connected to it via pipeline – Ireland, Denmark and the Netherlands.

Gas liquefaction plants are expensive, costing about $6 billion for a mid-sized facility; no UK company would invest this money in the UK when the government is trying to close down the North Sea. Only Norway and Russia have LNG plants in Europe. All of the EU countries are net gas importers.

5. Cost, Insurance and Freight

Transporting LNG across the Atlantic or out of the Persian Gulf also requires chartering specialist ships, shipping fuel, port fees, and freight insurance. Insurance is currently enormous and always is during wars, conflicts, or Houthi attacks on ships. Freight from the Gulf to Europe has to pass the Strait of Hormuz, the Gulf of Oman, the Bab el-Mandeb, the Red Sea and the Suez Canal. Insurance has to cover all these potential chokepoints. According to Reuters, the new insurance rate of 3%, is up from 0.25% before the conflict began.

Typically (2024/5), insurance from the Gulf to Europe added about €1 per MWh but can double if there are Houthi attacks or, as now, Iran is threatening to blow up oil tankers. In contrast, insurance of LNG across the Atlantic was about $0.10 per MMBtu in 2024/5.

6. There is no standard gas composite

There is no international gas price because there is no international gas composition. Gas composition varies by the amount of methane it contains (about 65% to about 97%) and by the additional gases or liquids it contains (ethane, butane, propane, etc.). North Sea gas is typically rich in hydrocarbons, with methane levels of 85-92%, with the rest mostly Ethane or Propane. Nigerian Delta gas has less than 75% methane but higher levels of ethane, propane, butane, and pentane. Qatari (North Field) is about 70% to 85% methane with high levels of ethane, nitrogen, and helium. Chinese (Sichuan Basin) gas is less than 75% methane, with high CO₂ levels. Many US gas fields have low levels of methane, but the gas is processed to remove the saleable Natural Gas Liquids (NGLs) such as ethane, propane and butane before it enters the pipeline, so processed Henry Hub gas has high levels of methane, up to 97%.

7. UK gas production is about half of UK gas consumption

For future reference, Bruce and her QuestionTime MPs should consult DUKES (Digest of UK Energy Statistics) before making easily checked remarks. I recommend Table 4.1.1 Methane production and consumption. The only problem with DUKES is that they are slow to update it.

In 2004, UK gas production and consumption were equal, both about 1.1 million GWh. Since then, UK consumption has fallen by about 40% to 684,000 GWh, while UK production has fallen by 70% to 344,000 GWh. This is due to successive UK governments’ policies: over-taxing production, restricting new wells, holding up approved wells, and basically doing whatever they can to destroy this industry. Presumably, the politicians either didn’t understand how important Gas was to the UK economy for heating, electricity production and back-up power and as an input for chemical industries, or successive UK governments always assumed that the UK would be able to import adequate gas supplies whenever it needed them, even though this has not worked in the past. The Government hasn’t even been able to sort out the UK’s Rough storage site. This was also an issue in 2022 when the Russians invaded Ukraine, and the UK believed the EU would stop buying Russian gas… Oh, no, they won’t.

Interestingly, in 2024, the UK imported 450,000 GWh and exported 120,000 GWH. This was because the UK still acts as a Land bridge to get gas to Ireland, Denmark and the Netherlands. The UK’s land bridge role was even more pronounced in 2022 when we imported 620,000 GWh and exported 260,000 GWh. This was US LNG being degasified in the UK and then sent via pipeline to the EU. At the time, Germany had no facilities to regasify LNG, as it was completely reliant on Russian gas delivered through the old Soviet Eastern European pipelines and the two Nord Stream pipelines. Germany now has 4 regasification terminals, all built since 2022, with two more under construction.

8. The EU Internal Energy Market is not a shield from international prices

This brings me to my final point: another nitwit social media commentator, the indefatigable Liz Webster, attempted to blame the UK’s daft energy policy on Brexit with the following post on X.com:

‘The Tories sold off our oil and gas instead of managing it like Norway. Then Brexit took the UK out of the European Union Internal Energy Market and doubled down on gas prices on global markets.’

Where to start! The EU Internal Energy Market governs how gas is traded within the EU; it is a transmission mechanism, not a price shield. The gas price in the EU is overwhelmingly determined by global supply, international pipeline contracts and the price of LNG and Shipping rates because the EU is a major NET GAS IMPORTER. The EU imports LNG from the US, Qatar, Nigeria, and Algeria, and has gas pipelines from Norway, Algeria, Azerbaijan, Russia, and the UK. The EU depends on imports, so global LNG prices and international pipeline contracts feed directly into EU hub prices. Since 2021, imported LNG has become the marginal supply setting price for the EU. EU gas prices on the TTF, PEG, and PSV all rise when LNG is bid up by Asian buyers and fall when LNG is abundant.

Brexit did not cause the UK to ‘double down on global markets’, but the destruction of the Nord Stream pipelines forced the EU to do this. The EU only ever had one member with large natural gas deposits – the UK. So, if anything, Brexit removed the EU’s one source of gas.

So, would the UK gas supply be more secure with North Sea gas?

So, in answer to the question: Would UK gas supply be more secure if we allowed oil and gas companies to exploit the North Sea, issued new drilling and exploration licenses and removed the Energy Profits Levy (Windfall Tax)? Yes! Undoubtedly, YES! Unequivocally, YES! Emphatically, YES!

Yes, the gas would be sold to the highest bidder, but only to the highest bidder with a pipeline connected to the UK Continental Shelf (UKCS) gas fields. Right now, that means us, and potentially Ireland, Denmark and the Netherlands.

Until the UK builds or restores its gas storage, and while gas provides 40% of UK energy, the UK will always be the highest bidder for North Sea gas transported by pipeline.

Without an LNG plant, the UK cannot export gas internationally.

There is no ‘international gas price’: gas prices vary with supply, demand, quality, transport costs, and insurance costs. Piping gas from the UKCS to the UK involves few costs and definitely no war risk insurance. The North Sea will always be our most secure supply until we start fracking or open the Gainsborough Trough field.

And finally, North Sea gas drillers pay 40% tax on their ring-fenced profits, so even if we get rid of the cretinous Windfall Tax, the HMT will still do very well from North Sea gas production. North Sea gas rigs employ thousands of workers at above-average wages, which also brings in tax revenue. Using domestic gas rather than imported gas reduces the UK’s trade deficit.

What’s not to like?

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Last week, the ONS published the trade figures for 2025. As with all trade figures since Brexit, they tell an important story that is being ignored in equal measure by the Government, the press, and, for that matter, the official and unofficial opposition parties.

In total, UK trade is OK. And the gloomsters who still believe Brexit has hurt UK trade have nothing to back up their beliefs – again. Between 2019 and 2025, total exports increased by 7% in chained volume measures (CVM), which accounts for inflation. This is due to the 27% increase in service exports, while goods exports were down by 15%. If we measure trade from the end of the transition period, Dec 31 2020, total exports are up by 21%, with service exports up by a massive 43% and goods exports down by just 2.4%.

But despite these export figures, the government is trying to drag the UK back into the EU’s Sanitary and Phytosanitary (SPS) area, claiming that this will help UK food and live animal exports. The trouble is that, of all the UK’s trade weaknesses, food and live animal exports aren’t among them.

The UK has never been a major food exporter; we just don’t produce enough, and the food we do produce is relatively expensive compared to food in EU countries with greater landmasses and lower wages. And the ONS Data tables go back to 1997; you can check this yourself here, TAB 8 for annual CVM. There was a brief period of stockpiling long-shelf-life food in the years before Brexit, but that was unusual. And now we can’t count bananas and mangoes imported from the Commonwealth as UK exports to Ireland or France, so no amount of resetting the relationship with the EU is going to push UK food exports back to their heady heights of 2019 stockpiling.

Despite this, Nick Thomas Symonds is still hoping to force the UK to follow all EU food and farming regulations, regardless of how silly they are. The EU still uses the precautionary principle when it comes to food and agricultural regulations, even though its pharmaceutical regulations, as well as the UK’s food and farming regulations, follow – ah, science. Many EU plant-biotech researchers and companies would prefer to follow the UK’s regulatory model rather than the EU’s. Several have shifted research and development and field trials to the UK or are actively collaborating with UK companies to get around EU restrictions. This has become so dominant that the EU is now considering loosening its rules on gene-edited crops due to competitive pressure from the UK. UK agricultural regulations obviously aren’t broken, so why does Thomas Symonds want to fix them?

There also doesn’t seem to be any problems with UK-EU trade when it comes to food imports. As usual, in 2025, the UK imported almost 4 times as much food from the EU as it exported to the EU. So why are we trying to fix a problem that isn’t broken, while ignoring a much larger problem that clearly is?

The real problem with UK trade

The reason UK goods exports have fallen by 14% since 2019 has nothing to do with Brexit, but everything to do with Net Zero. The main reason for the UK’s weakness in exports is that fuel exports are down 12.2%, chemical exports are down 15.5%, and materials manufactures, which include iron, steel, glass, and ceramics, are down 21.8%. (All calculations using ONS annual CVM values, updated July 2026) And these export categories are, or at least once were, major export sectors for the UK.

Why are we worried about food exports of £17.5 billion being down by 12% from 2019, when Chemical exports of £66.3 billion are down by 16%, Material Manufactures of £33.8 billion are down by 22%, and fuel exports of £43.2 billion are down by 12%? Why is our government so unconcerned by the demise of UK manufacturing?

Manufactured goods exports dwarf food and live animal exports, yet the government doesn’t seem to care about their demise. Perhaps these goods are a bit too working-class for our current north London legal fraternity pretending to be a government. And this isn’t a Brexit thing; in general, our manufacturing exports to the EU have fallen in line with those to non-EU countries.

Except for one commodity – fuels. UK fuel exports to the EU are outperforming UK exports to the Rest of the world. So while total UK fuel exports are 12.5% lower, fuel exports to the EU have fallen by only 7.5% since 2019, while fuel exports to the rest of the world are down by 21.6%. This is proof, if it were needed, that countries import the goods that they need, not because their governments have signed a Reset agreement.

The EU’s dilemma

The Reset will not make the EU buy more UK food. They don’t need it. They have their own food; it is very good, very subsidised, and very protected. But the EU has very little oil, gas, and coal. They need as much as they can get, and they are happy to buy it from Russia, even though they are presently raising money to lend to Ukraine to buy weapons to fight Russia; they are still buying Russian oil and gas because they don’t have a choice. They need fuel.

The EU just signed a trade deal with India. The EU’s biggest import from India is refined oil. India has very little crude oil; it imports 88% of the crude it refined in 2024/5 – and where is that crude coming from? Most likely Russia. Russia supplied 37% of India’s crude imports in 2024. Luckily for the EU, refining converts Russian Crude from one HS code to another, so the refined oil the EU imports from India magically becomes Indian rather than Russian for trade purposes.

If only there was another country that could supply the EU with oil and gas, a country that was just across the channel, already connected with gas pipelines. But alas, the UK DESNZ Minister, Ed Miliband, would prefer to see the EU buy Russian oil and gas, whether directly or indirectly, than allow oil companies to fully exploit the UK’s natural resources.

Pumping out more oil and gas would also help UK refineries and prevent our few remaining chemical companies from closing. We don’t even have to use it ourselves; we just need to sell it to the EU to improve our balance of trade. The UK’s trade deficit in goods in Current Prices was £242 billion in 2025. Our trade services reduced this to £39.5 billion, but even this deficit could vanish if we just exploited our oil and gas reserves as Norway does. The UK’s fuels trade deficit of £28.4 billion makes up 72% of the UK’s total trade deficit. If the UK became a net exporter of fuel, this deficit would disappear.

In case you missed it, I am just going to reiterate the EU’s and Starmer’s dilemma: The EU wants the UK to pay into a fund so that Ukraine can buy weapons from EU defence companies to fight Russia, and Starmer agreed to pay into this fund just days before he was removed from office and replaced by Andy Burnham. The EU assures us that the UK will pay a ‘fair and reasonable contribution to its E90 billion loan to Ukraine for defence and other budgetary requirements. Starmer didn’t announce publicly how much this will cost the UK.

Yet the UK is restricting UK oil and gas production, forcing the EU to buy its oil and gas either directly from Russia or via Indian refineries. Russia is able to build its own weapons with the money it gets directly and indirectly from selling oil and gas to the EU. Maybe if the EU just stopped buying Russian oil and gas and bought UK oil and gas instead, Ukraine wouldn’t need the weapons.

Why isn’t this option part of the Reset? Why is the UK still kidding itself that it is an agricultural exporting nation?

This article was updated in July 2026 in line with updates to the UK’s trade figures and with additions about the latest UK EU defence agreement.

Someone has hacked my account.

While researching a paper on the effect of closing oil and gas production on the UK economy, I encountered a troubling case: a titanium dioxide plant in the UK that had been driven out of business by the UK’s high energy costs and other environmental regulations, as well as cheaper imports from China. But there may be another reason for its demise: the EU’s precautionary principle.

Titanium Dioxide (TiO2) is a white, opaque, highly reflective pigment. It is primarily used in paints, paper and plastics; sunscreens (to physically block UV light); toothpaste and makeup; tablet coatings; photocatalysts; and electronics. Titanium Dioxide (E171) is also a food additive used in chewing gum, confectionery, and bakery products.

But the EU banned its use in food in 2022 after EFSA concluded that it could no longer be considered safe due to ‘uncertainties’ about genotoxicity. It is still in use in the UK and the US. The US limits its use in food to 1% of the food’s weight.

The EU and the UK examined the same scientific evidence on titanium dioxide (E171), but they reached different regulatory conclusions because they follow different risk‑assessment philosophies and have different criteria for banning a food additive.

Under EU law, if there is scientific uncertainty and a substance might pose a risk, then regulators ban it first and ask questions later. Even when the substance has been widely used for many years, as in the case of titanium dioxide. This is a core feature of EU food‑safety legislation. And under the Reset, these people will soon be making UK food regulations!

UK food regulations use a “risk‑based” rather than “hazard‑based” approach. The UK tends to regulate based on demonstrated risk, not theoretical hazard, and on the probability of exposure, not just the possibility. This is a more sensible regulatory system than the EU’s precautionary principle.

The European Food Safety Authority (EFSA) conducted a 2021 study into titanium dioxide and concluded that it could not rule out the genotoxicity because the evidence was insufficient to ensure safety. That was enough for the EU to apply the “precautionary principle” and ban its use in food in the EU and in all imported foods. Hence, Regulation (EU) 2022/63 prohibited titanium dioxide (E171) as a food additive.

The EU is so cautious that it has also banned the use of Titanium Dioxide in Animal feed, even though this is not one of its regular uses. It is only used by researchers as a marker in digestibility studies, not as a nutritional ingredient. But still, as a precaution, the EU has Regulation (EU) 2021/2090 denying the authorisation of titanium dioxide (E171) as a feed additive for all animal species.

The UK’s Food Standards Agency (FSA) also conducted a review of Titanium Dioxide using the same evidence as the EFSA. The FSA did not believe that the evidence justified a ban because the uncertainty regarding genotoxicity was insufficient to demonstrate a real risk, and the available data did not show harm in humans. Instead of a ban, the FSA wanted more research before changing the law. How sensible.

Any food product sold in the EU must comply with EU food standards, regardless of how absurd. We will soon be allowing these nitwits to make UK rules. If they had scientific evidence that it was harmful, fine. But they don’t. They banned it as a precaution.

Titanium dioxide has been widely used in food, confectionery, and tablets since the 1960s. One would have imagined that if it were damaging DNA, someone would have noticed by now. To add to the EU’s stupidity, Titanium Dioxide will still be permitted in the EU for use in pharmaceutical tablets, where it is used not just as a colouring agent but also to protect tablets from light and to improve durability and shelf life. So maybe they aren’t so worried after all.

Incredibly, the reason for this EU cognitive dissonance is even more perverse: the European Medicines Agency (EMA) does not apply the precautionary principle; its decisions are based on scientific evidence and on whether the benefits outweigh the risks. The EMA concluded: ‘There is no immediate safety concern for patients, and removing TiO₂ from medicines could compromise drug quality.’

So banned in chewing gum but not in aspirin…Hmmm. Precaution, not so much.

Meanwhile, under the reset, food manufacturers in the UK will have to alter their recipes and find other ingredients that produce the same effect, but don’t scare the Luddites in the EU. They will also have to test that the end product tastes the same and that its appearance appeals to consumers. All of this takes time and money. But those costs will not be borne by the EU bureaucrats nor by the lazy UK politicians who want to pass their jobs to the EU without first checking how many stupid rules the EU has implemented since we left.

Why would any sensible government allow the technophobe department of the EU to make UK food and agricultural standards? These people should be nowhere near our regulations. The UK Food Standards Agency and its science-based decision-making should not be replaced by the EFSA and the precautionary principle.

Stop the Reset.

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The most successful parasites, those that have persisted for centuries or millennia, don’t kill their hosts. Parasites can’t exist without a host, so they have evolved to take enough sustenance to survive without killing their source of sustenance.

Governments are parasitic: They claim to ‘provide’ benefits such as protection, legal rights, and social services, including healthcare and education, but do so by taxing the population enough to cover the ‘benefits’ as well as pay for their own existence, the expanding public sector, and other undeserving causes promoted by lobbyists.

The EU’s extortionate loan

In 2026, the undeserving recipient of UK taxpayers’ money will be the parasites’ parasite: the European Union. Yesterday, they were back in Westminster with yet another scheme to get money from the UK taxpayer. This time, they want money from UK taxpayers so that Defence Companies based in Britain, some of which are owned by EU member governments, can sell weapons to Ukraine.

The EU is loaning Ukraine £77.6 billion for two years at what appears to be an astronomical interest rate: The Telegraph reports that interest payments will be £17.2 billion! The EU would now like the UK to agree to pay this interest bill. The loan is to enable Ukraine to buy weapons, but France wants Ukraine to only buy EU-made weapons. So why should we pay?

In March last year, the UK joined the G7’s European Recapitalisation Assistance (ERA) Mechanism to recapitalise Ukraine’s defence industry and procurement capacity and committed £2.26 billion to it. ERA funds are not tied to any country’s supplier. Ukraine is free to purchase from any weapons supplier, including the US, UK, and Ukrainian domestic producers. The UK has also given Ukraine £13 billion in military support since 2022. This includes weapons, training and equipment. If the UK government wants to fund Ukraine’s defence purchases, it should do so directly, not through the EU.

Why is the Labour Government so desperate to send OUR money to Brussels?

Why does the EU need so much money?

Unlike the national governments, the European Union does not provide EU citizens with any government-type services, such as an army, police, education, or healthcare. The governments of EU member states still provide these services with the taxes they collect.

The EU bureaucracy imposes an additional layer of regulation that necessitates its own court and enforcement system, which, in turn, requires funding—money the EU takes from its members, as well as from payments imposed on non-member countries and from fines on international companies.

In 2024, the EU raised a total of €250 billion: €20 billion from Customs duties (which it considers to be its ‘own resource’ – it is a Customs Union after all,) €121 billion from its member states for a proportion of their GNI, VAT, and the plastic packaging tax—as well as €109 billion in other revenue.

The EU’s regulatory burden

And what do EU citizens get for this money – lots and lots of regulations and directives. EU Regulations come directly from Brussels and are implemented immediately in all member states. At the same time, EU Directives have to be implemented by the member states’ national governments and so are often varied slightly – either made more flexible or gold-plated by the implementing government.

By leaving the EU, the UK has missed out on over 25,000 new EU rules. This is a massive burden on EU populations, businesses and trade. And this is probably why the engines of the EU economy: Germany, the Netherlands, France, Italy, and Spain have been doing so badly economically.

I made the chart below in November last year. In case you are wondering the EU finished 2025 with Regulation (EU) 2025/2650 issued on 19 December 2025.[1] So another 2,650 Regulations were avoided by the UK in 2025.

UK payments to the EU, despite Brexit

Taxpayers in EU member states fund their Local and State Governments, their National Governments, and the supranational EU regulatory machine.

The EU also collects money from non-Member States that participate in EU programs. For example, EEA countries, despite not joining the EU, are still expected to pay for EU governance. As with all EU payments, this cost is not related to the services a country uses but to its Gross National Income (GNI), so Norway pays almost all of the EEA’s EU bill.

So EU taxpayers are probably delighted to read about the generous donations the UK’s Labour Government is desperate to give to the EU, even though the UK population voted to leave the EU, partially because the population thought that the money they sent to the EU could be better spent in the UK. Most memorably, on the NHS.

Horizon Europe – UK payments

The UK pays the EU £1.3 billion a year to participate in Horizon Europe and £154 million for Copernicus, the EU’s Earth-Observation Program. These amounts are calculated on the UK’s GNI relative to the EU’s GNI, not on the amount of research done in the UK. This ‘participation’ amount is then ‘topped up’ if UK researchers win significantly more funding than their ‘expected share’. A House of Commons Briefing expects the annual payment to be about £2.2 billion, given that the UK is widely recognised as having the best research and universities in Europe.

In 2024, Horizon Europe spent €13.8 billion, of which only €1.179 billion was shared among all non-EU participating countries. In contrast, Belgium alone received €1.756 billion, Germany €1.675 billion, France €1.234 billion, and Spain €1.113 billion.

British researchers would be much better off if the UK government paid both the Horizon participation fee and the top-up fee directly to UK researchers, eliminating the EU parasitic middleman.

For balance, I should point out that the Horizon Europe payment was negotiated by the Conservative Government in September 2023. However, rather than learning from the Conservatives’ mistakes, the Labour government plans to commit the UK to additional EU revenue-raising schemes.

The extra payments the UK managed to avoid

Before Brexit, the UK was the second largest net contributor to the EU Budget. But after we left, the EU did not cut its spending. The EU’s 2021-2027 budget increased, most notably to cover:

• The Cohesion Fund to help Eastern Europe;

• the EU’s ‘Green Deal’;

• funding for increased migration and border control (allegedly);

• the EU’s Digital transition (also allegedly);

• the EU’s €750 billion COVID-19 Recovery Fund; and

• the NextGenerationEU fund.

Consequently, Germany, France, the Netherlands, Sweden, Austria and Denmark all had to pay significantly more to the EU budget than they did when we were members. While Poland, Hungary, Romania, Bulgaria, and Greece all continued to be net recipients of EU funds. (This is one of the reasons that you should not be surprised when the ill-informed tell you that Poland is growing faster than the UK – it has done so with EU, including UK, funds, which were used to update Polish factories and infrastructure and to subsidise German and British manufacturers to move their factories to Poland. Poland has been a net recipient of EU funds every year since it joined the EU in 2004.) Poland has also received substantial remittances from workers who moved to wealthier EU countries to work and remitted their wages to their families in Poland. Poland is now seeking to attract them back.

EU’s ‘own’ resources - aka Green taxes

The EU has also moved away from relying solely on a proportion of its members’ GNI, VAT, and Tariff revenue. The EU now has its ‘own resources’ which are effectively additional consumption taxes. For example, the EU’s Plastic Waste Levy, introduced in 2021, under which EU Member States pay €0.8 per kg of non-recycled plastic packaging to the EU. (It is almost as if environmental laws were designed to tax the public rather than to save the environment.)

Another ‘own resource’ will be the EU’s Carbon Border Adjustment Mechanism (CBAM). This was introduced in 2023 but did not require payment; firms were required only to begin keeping records of the CO2 emissions embedded in their imports of iron, steel, aluminium, cement, fertiliser, hydrogen, and electricity. Not that measuring and record keeping are without cost. From 1st January 2026, the EU began charging carbon-emissions-related import taxes on all CBAM goods.

While the CBAM is expected to raise billions of Euros for the EU bureaucracy, it will also push up the production costs and subsequent sales prices of EU industrial goods that use imported iron, steel and aluminium, as well as the price of EU construction projects that use iron, steel, aluminium and cement, and the cost of food production that needs fertiliser. Countries such as Ireland will have to pay a CBAM for the electricity they import from the UK, even though Ireland has no alternative suppliers. UK electricity is partially generated by gas on most days, including for back-up and grid balancing.

The UK is not the only country to be deindustrialising due to its crazy net-zero rules. In 2000, manufacturing in the then EU-15 accounted for about 20% of EU value added. By the late 2010s, the EU-28’s manufacturing accounted for about 15% of total value added. Adding costs to imported raw materials, such as steel and aluminium, will not reverse this trend. EU and UK manufacturers export a high proportion of their goods. The UK, for example, exports 80% of the cars it produces. Exported cars have to compete in international markets with cars made using cheaper iron, steel and aluminium that was not taxed for its embedded emissions.

What is the point of joining the EU’s CBAM?

One reason the EU needs to introduce a CBAM is to prevent EU companies from relocating manufacturing to Asia to avoid EU Emissions Taxes and the requirement to purchase allowances under the EU Emissions Trading System (ETS). The EU calls off-shored manufacturing ‘Carbon leakage’. The ETS raised €39 billion in 2024, with 36% allocated to the EU and the remainder retained by the Member States. The EU has expanded its ETS to include maritime shipping and introduced ETS2 in 2023 to cover fuel combustion in buildings, road transport, and SME manufacturers and commercial facilities with fuel combustion below the ETS threshold.

ETS2 differs from the original ETS in that fuel suppliers must purchase CO₂ allowances to cover the emissions associated with the fuel they sell, thereby increasing fuel prices and operational costs for small manufacturers, services and distribution companies. To date, ETS2 remains in the reporting and data collection phase. The need to purchase ETS2 allowances will not begin until 2027.

Digital Levy

The EU has also proposed a digital Levy on digital companies operating in the EU. While this is expected to raise up to €2 billion per year, the EU is currently raising substantially more from fining U.S. digital companies for various violations, it should avoid driving digital companies out of the EU by imposing additional Levies.

The EU has repeatedly fined Apple, Meta, Alphabet, and Amazon for violating its competition and digital market rules. Both Apple and Meta have been fined under the EU’s Digital Markets Act. In total, over the last decade, the EU has fined Apple €1.8 billion in 2024 and €13 billion in a tax ruling. Google/Alphabet was fined around €8.25 billion in three cases, including a €3 billion fine for dominance in digital advertising. Meta has been fined €1.2 billion under the GDPR and €800 million for tying Facebook Marketplace to Facebook; this is apparently against EU competition policy. Amazon has paid €1 billion in fines, and Microsoft has incurred multiple antitrust penalties. The EU has fined X €120 million for breaking the EU’s Digital Services Act.

While I appreciate the importance of competition to keep markets vibrant and affordable, these EU fines would seem more reasonable if the EU actually had some world-class digital companies of its own. Without any, these fines just appear to be revenue-raising. Which is probably what they are – the EU is just the world’s APEX parasite.

[1] Regulation (EU) 2025/2650 of the European Parliament and of the Council of 19 December 2025 amending Regulation (EU) 2023/1115 as regards certain obligations of operators and traders. This amends the EU Deforestation Regulation (EUDR), introducing simplifications (e.g., tiered supply chain responsibilities, reduced due diligence for certain operators) and postponing key application dates (to 30 December 2026 for most operators, and 30 June 2027 for micro/small enterprises). It was published in the Official Journal on 23 December 2025.

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A year ago, Donald Trump was inaugurated as the 47^th President of the United States and immediately warned the world that he would change the way the US conducts trade by applying tariffs by country rather than by product type.

This was a clever move. When David Ricardo proposed his theory of comparative advantage and trade in 1817, he used England and Portugal as examples of trading partners. Portugal is England’s oldest ally: the first Anglo-Portuguese Treaty was signed in 1373, and both countries still have a formal alliance. Ricardo did not use trade between England and France as an example, as England had only just won the Battle of Waterloo against the French. The unmentioned inference of Ricardo’s theory is that free trade works amongst allies with something to sell (port and cloth in Ricardo’s case). Donald Trump had also come to this conclusion.

The Most Favoured Nation principle is out of date

The core principle of the international trade regulations, known as the General Agreement on Tariffs and Trade (GATT), is that its members must apply the same tariff on the same type of good if it is imported from any other GATT member.

However, almost since the GATT’s inception, countries have been using non-tariff barriers to restrict competitively priced imports and/or openly subsidising their domestic producers so that their goods are more competitive in both domestic and international markets. (The GATT was absorbed by the WTO in 1995 and is now administered by them.)

For a long time, the US turned a blind eye to non-tariff trade barriers, as they helped countries devastated by the Second World War rebuild their economies. Non-Tariff barriers and restrictions on currency transfers also helped many impoverished Asian nations build their manufacturing capacity in the 1970s and 1980s. The well-meaning American, Cordell Hull, the main architect of postwar trade liberalisation, possibly assumed that once countries had rebuilt their cities and industries, they would lower their trade barriers. How wrong he was, especially about the EU.

The EU began as the European Coal and Steel Community in 1952, expanded its remit to all economic sectors in 1958 to become the European Economic Community, in 1962 it began subsidising its agricultural production, and in 1968 it formed a Customs Union. The Customs Union abolished all internal tariffs between its members but applied high tariffs and regulatory restrictions on all goods imported from outside the Union.

Modern Tariffs are extremely granular; they can change at the ten-digit level of Harmonised System tariff codes based on packaging size or the sweetness of the goods. But not by whether they were made by friend or foe, or in countries where energy is subsidised, or where ports, storage areas and roads connecting them are built by the government, or in factories on land given to the enterprise, even goods made by slave labour will be charged the same tariff if the country exporting them is a member of the WTO.

This equal treatment for all members was understandable when the US established the GATT in 1947, as only 23 countries were signatories. And they all generally had similar ways of doing business. Many were Commonwealth countries: Australia, Burma (Myanmar), Canada, Ceylon (Sri Lanka), India, New Zealand, Pakistan, Zimbabwe, South Africa and the United Kingdom. The only European nations to join, other than the UK, were the Benelux countries (Belgium, the Netherlands, and Luxembourg), Norway, France and Czechoslovakia (now the Czech Republic and Slovakia). Brazil, Chile, and Cuba also joined. As did Syria and Lebanon.

The World Trade Organisation (WTO) absorbed the GATT in 1995 and now has 164 members, including several with very different attitudes to trade, economic governance, human rights, workers’ rights, government subsidies, etc., but their export goods all face the same tariff rate from other WTO members. This is known as the Most Favoured Nation rule.

All countries have a consolidated tariff schedule, sometimes called a Schedule of Concessions, which sets the maximum tariff rate legally allowed for imports from other WTO members. Countries can charge less than their published maximum tariff, but under the WTO rules, all WTO members should also be charged less.

Trump’s new trade rules

A year ago, Trump threw this process up in the air and demanded that countries that were excluding US goods from their own markets with non-tariff barriers and other restrictions, as well as countries dominating the US domestic market with subsidised products, would face higher US tariffs than countries that do not resort to these practices. And that all imported goods would be subject to a minimum 10% tariff. This is effectively a VAT on imported goods, which makes more sense than applying VAT to all goods, as most EU countries do.

Trump knew he was on strong ground with his new trade rules due to the might of the US consumer market. The US is the single largest consumer market, accounting for 15%-18% of global consumption, ahead of China, the EU, and India. All countries that severely restrict imports with high tariffs and non-tariff barriers. Because of this lack of consumer competition, US consumer demand heavily influences global supply chains, commodity markets and multinational corporate strategies. Changes in US interest rates, inflation rates, or fiscal policy will affect the bottom lines of companies worldwide. Unlike the EU, Trump really does have a trade Bazooka.

Even if the Supreme Court decides that the US IEEPA tariffs applied to individual countries are against US laws, Trump and his Trade Representative can still increase tariffs using Sections 232 (national Security), Section 301 (Unfair foreign trade practices), Section 201 (safeguards for US industries), and Section 336 (adjust tariffs to equalise costs of production).

Trump could also take a leaf out of the EU’s book and start using non-tariff barriers, such as requiring imports to comply with US energy regulations, banning the use of US product names, some examples could be blue jeans, hamburgers (yes they’re American, the German version didn’t have a bun) and trainers, and imposing tiny quotas on more efficient producers to prevent imports from countries he doesn’t like. Maybe he could force all imported goods to use US labelling and US agricultural processes, or he could let each US state interpret the trade laws differently – the EU currently does all of these things.

Who really has a Trade Bazooka

Last week, Trump distracted the EU leadership by reiterating his 2019 desire to buy Greenland and threatening to impose 10% tariffs on all goods from eight European countries ( Denmark, France, Germany, the UK, Sweden, Norway, Finland and the Netherlands) from February 2026 unless a deal for the complete and total purchase of Greenland was reached. He also warned that these tariffs would increase to 25% by June 2026 if his demand were not met.

The EU officials considered retaliating by applying what they termed a “Trade Bazooka” on US goods. This would include retaliatory tariffs, restrictions on US market access in key sectors, and the suspension of the ratification of the EU-US trade deal agreed last year.

There are several problems with this strategy:

1. The US economy is not as dependent on trade, especially trade with the EU. However, the EU is. The World Bank calculates that US Trade is equal to 25% of its GDP, while for the EU, trade is equal to 92% of its GDP.

2. Only 18% of US imports come from the EU. They were worth $618 Billion in 2024. The US is the EU’s largest market. The EU cannot afford a trade war with the US.

3. The EU’s largest export sector to the US is pharmaceutical products, and these are mainly exported from Ireland by US companies based there for tax reasons. Trump already wants these companies to reshore their manufacturing to the US. A trade war would only make this easier.

4. The second and third largest EU exports to the US are turbojets, turbopropellers and other gas turbines and Vehicles. All things the US excels at making, and where the US manufacturers would appreciate less EU competition. When Trump was told about the EU’s Trade Bazooka, I imagine him repeating Clint Eastwood’s famous line from Dirty Harry: ‘Go ahead, make my Day.’

5. Almost everything the EU exports to the US competes with US-manufactured goods. The EU has few unique resources or products that the US couldn’t produce domestically or source more cheaply from other suppliers.

6. On the other hand, US exports to the EU in 2024 were only $371 billion, and a fifth of this was fuel – LNG and oil. The EU has almost no oil and gas resources and must import them. And the US is the world’s largest exporter of hydrocarbon-based fuels.

The EU is snookered.

The EU has always restricted US finished goods imports through non-tariff barriers, so it doesn’t have a big stick or bazooka to threaten the US. The EU tries to throw its weight around by insisting that its trading partners follow EU rules, but then only wants to export EU goods, not import goods from those partners. The tiny quotas in its latest Mercosur trade agreement are a perfect example. The EU primarily imports the raw materials it needs to make higher-value goods. So, raw materials unavailable in the EU are imported tariff-free; refined materials have higher tariffs; finished goods have the highest tariffs; and goods from countries with which the EU has trade agreements are excluded due to non-compliance with EU regulations or limited by tiny quotas.

The EU saw itself as a ‘Regulatory Superpower’ imposing and enforcing the world’s trade regulations. The EU is incensed that Trump is now setting global trade rules that vary by country rather than by product. Under Trump’s new rules, US allies who pay for their own defence will get better treatment than those that don’t buy US goods but expect the US to defend them in a war, i.e., the EU.

In the end, Trump didn’t implement the additional 10% tariffs, as he seems to have got the total access to Greenland he wanted. However, by referring to their retaliation proposal as a ‘Bazooka’, EU officials probably only reminded the US president that EU countries aren’t spending enough on their own defence and still rely on the US for military protection. If they try this again, perhaps they should use a less suggestive name.

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Yesterday morning on the BBC (18/1/26), the Chair of the Royal Association of British Dairy Farmers was interviewed about the problems UK dairy farmers face due to falling milk prices and oversupply. He blamed this on the ‘global milk price’. Global? Seriously?

The UK does not import milk from the global market. It doesn’t even import milk from major dairy exporters like New Zealand, which has a trade deal with the UK. And milk was neither excluded from the trade agreement nor hit with a tight UK quota for many years, as the UK did to New Zealand beef, lamb, butter, cheese, apples, etc. There was no need to do this. Milk doesn’t travel well.

All of the UK’s imported milk comes from the EU – all of it! The World’s top six milk exporters are all EU countries: Germany, Belgium, the Czech Republic, the Netherlands, France, and Poland. The UK is 7^th, that’s right, the UK is the world’s 7^th largest milk EXPORTER. So why is this British Dairy farmer complaining about the low ‘global’ price? The only non-EU country in the world’s top 10 milk exporters is New Zealand.

British dairy farmers should stop kidding themselves; they are not being undercut by ‘global prices’, they are being undercut by subsidised EU prices. New Zealand’s milk is exported to China, the Philippines, Taiwan, Malaysia, Vietnam, Fiji, New Caledonia, Tonga, Samoa and almost every other Pacific island nation you can think of, including French Polynesia and the US Minor Outlying Islands, but not to Europe or the US mainland. As I said, fresh milk doesn’t travel well or far.

It is also worth noting that the UK exports less than 10% of the milk it produces each year. The UK produces 12.6 billion litres of milk each year, but exports only about 1 billion kilograms of total dairy products, including milk, cheese, butter, and powdered milk. This is not about global prices; it is a domestic price problem.

The UK exports three times as much fresh milk as it imports, but almost all of its exports go to Ireland, and they are probably exported from Northern Ireland, which is still part of the EU’s territory for agricultural rules. There is no need for Northern Ireland to sign up to the EU’s SPS area; it is already in it.

Meanwhile, although Ireland also supplies about 90% of the UK’s milk imports, we also import milk from Germany, Poland, France, Belgium, the Netherlands and Denmark. With small quantities imported from Romania, Spain, Italy, Portugal, Luxembourg, Sweden, the Czech Republic, and Austria. As I said, all EU. All subsidised.

The real cause of dairy farmers, dairies and supermarkets’ problems

But anyone who watched the BBC’s interview will have noticed something else: all of the dairy farmers in the video had massive electrical milking machines, and somewhere out of camera shot, there would have been refrigerated storage facilities. The dairies that buy, collect, pasteurise, homogenise, and bottle this milk, then distribute it to supermarkets, will also have massive electricity bills. Energy is possibly their largest expense. The Supermarkets that sell most of the milk also have massive electricity bills from refrigerated storage rooms and open refrigerated shelving in their stores. Even if you still have a milkman delivering your milk, they probably use an electric milk float.

Energy costs are the problem.

If anything is forcing Supermarkets to cut the amount they pay farmers for wholesale milk, it is probably the cost of electricity. This is an expense where supermarkets have little negotiating strength because they have stores all over the country, so they are not a major players for any power company.

To add to the absurdity of the UK’s agricultural pricing, The Telegraph reports that an activist who gained media attention from throwing custard at the crown jewels for Just Stop Oil, is now planning to steal food from Waitrose Supermarkets for another NGO called Take Back Power. He claims Waitrose prices are too high. While this cretin from Chiswick via Exeter University probably doesn’t know that ‘other supermarkets are available’, he should understand that his old masters at Just Stop Oil are a large part of the reason why Waitrose’s energy bills and, therefore, its prices are so high.

The UK has the highest industrial electricity prices among developed countries. This is due to the UK’s Carbon Price Support (CPS) tax, its emissions allowance costs, and the additional balancing and backup costs resulting from the large proportion of intermittent wind and solar power in the UK grid. The UK introduced the CPS in 2013 to discourage the production of coal-fired electricity. The last coal-fired power plant closed in September 2024, so why is this additional £18 per tonne of CO2 still being added to electricity bills? This adds about £8 per MWh.

Chart below from Electric Insights, Quarterly Report

More problems from the EU Reset

The CPS also makes UK electricity more expensive than EU electricity now that the UK-EU Reset will force the UK to join the EU’s ETS scheme and pay the same ETS price as EU electricity consumers. Paying the EU ETS tax and the UK’s CPS tax will push up costs for UK industry, as well as for supermarkets and their customers. It will also probably drive out the few remaining industries in the UK, but that requires another essay.

Lowering industrial electricity costs for all businesses would help reduce costs for UK consumers, and it is a better solution than forcing dairy farmers out of business by lowering wholesale milk prices.

It is a pity that the custard cretin from Chiswick didn’t use his degree to lobby the government to remove the CPS taxes on electricity producers, now that the UK has ‘Just Stopped Coal’ to generate electricity. Let’s hope he gets arrested for stealing food – he has warned Waitrose he is coming, and they know what he looks like thanks to his publicity drive for his new cause.

On the plus side, one of my local Waitrose (yes, I have two) has just replaced its open refrigerated shelving with closed, glass-sliding-door refrigerated shelving. This should lower their energy costs and could lower prices for paying consumers – it is just a pity that paying customers will also have to make up for the cost of food stolen by ‘eco activists’.