A ghost of chancellors past speaks
A ghost of chancellors past has returned. He is not happy. George Osborne, who ran the British economy for six years, has called for the United Kingdom to rejoin the European Union’s customs union. He did it on 13 September. The intervention from a former Conservative chancellor represents a serious challenge to the established Brexit settlement, dragging a technical and divisive subject from the political fringe back into the mainstream. His timing is deliberate. His words are blunt.
Mr Osborne was not just any minister. He was David Cameron’s closest political partner, the co-architect of a government that ended with the 2016 referendum. After the vote he resigned. He then left politics entirely. Now he argues that the British economy has ‘fallen off a cliff’ since that departure, describing the entire project he once opposed from inside Number 11 as ‘a mess’. Such language, coming from a man once at the absolute centre of the Conservative establishment, carries a particular weight. It is one thing for the opposition to criticise Brexit’s economic consequences. It is another entirely for the man who balanced the nation’s books before the vote to declare it a failure.
His voice matters in the City. It matters a lot. Since leaving Westminster, Mr Osborne has moved through a series of roles in finance and media, maintaining the connections that made him a formidable chancellor. He is not some forgotten backbencher. When he speaks on the economy, boardrooms and trading floors listen because they see him not as a politician making a speech but as an insider offering a diagnosis. His declaration that rejoining the union could be ‘quite simple’ will be seen by many in business as a flicker of hope, a potential route out of the complex trade frictions that have defined the post Brexit era. This is a targeted strike. It was meant to start a difficult conversation. For many in Westminster, it is a conversation they never wanted to have again.
What is the customs union anyway?
So what is the customs union. The term sounds technical. It is not. Think of it as a trading club with two very important rules. Obeying them makes life much simpler for businesses moving physical goods across the borders of member countries. The first rule is simple. No tariffs on each other. This means a member country does not charge customs duties, which are effectively border taxes, on goods imported from another member. A pallet of Irish whiskey arriving at Calais would not face a French import tax, just as a lorry full of Italian cheese would face no German duty at the Brenner Pass. It is a tariff free zone for goods. For goods only.
The second rule is the complicated one. It is the rule that forces a huge political choice. Every member of the club must apply the exact same set of tariffs to all goods coming in from outside, a system known as the common external tariff. It is a single protective wall around the entire bloc. So whether a container of Chinese electronics arrives at the port of Antwerp or a shipment of Brazilian beef lands in Lisbon, it is hit with the identical import duty set by the European Union in Brussels. The national government in Belgium or Portugal has no say in the matter. The rate is the rate. This is what creates a level playing field inside the union, preventing one country from trying to get an advantage by importing cheap parts from Asia to then sell finished goods tariff free into the rest of the bloc.
Crucially, the customs union is not the single market. That is a completely different arrangement. The single market goes much further, creating a unified economic area that also covers services, the movement of capital and, most controversially, the free movement of people. Rejoining the customs union does not automatically mean accepting the jurisdiction of the European Court of Justice across the whole economy. It does not mean reopening the UK’s borders to EU citizens. A country can be in the customs union without being in the single market. Turkey is the main example. It has a customs union agreement with the EU for most goods but is not a member of the single market and does not have free movement with the bloc.
This is the central trade off. This is the price of admission. A country inside the customs union gains frictionless goods trade with its largest and closest trading partner, eliminating vast amounts of paperwork, checks and costs. But it must sacrifice its independent trade policy to do so. A member cannot sign its own free trade deals. It is bound by the agreements negotiated for the entire bloc by the European Commission. The power to strike a bespoke deal with a growing economy like India, or to change tariffs on food from New Zealand, would be gone. It would be surrendered to Brussels. That is the bargain George Osborne is now asking the country to consider.
The price of paperwork
George Osborne called it falling off a cliff. He was speaking on 13 September. For most British businesses trading with Europe, the change felt less like a sudden drop and more like being forced to walk uphill through thick mud, every single day. The mud is paperwork. The hill is cost. Before leaving the customs union, sending a pallet of goods from a warehouse in Birmingham to a buyer in Berlin was a simple logistical exercise, almost entirely free of bureaucracy at the border. Now, it is an international export transaction burdened with significant administrative obligations. Every shipment requires a formal customs declaration, a complex digital document detailing the sender, the recipient, the contents and their value.
These declarations are not free. Far from it. Filing a single form can cost anywhere from £25 to £50, a fee paid to a customs agent or a specialist logistics firm for their time and expertise. For a large corporation moving bulk freight, this is a manageable line item on a spreadsheet, but for a small company dispatching hundreds of individual packages a month, the costs multiply quickly into thousands of pounds of lost margin. It is a friction tax. This financial drag disproportionately affects the smaller businesses that make up the backbone of the British economy, forcing many to simply abandon the European market altogether because the numbers no longer add up. This is the mess Osborne described.
Then there are the rules of origin. This is another layer of bureaucracy. To benefit from the zero tariff terms of the UK,EU trade deal, an exporter must prove their product originates in the United Kingdom, a process that can be fiendishly complicated. Consider a British cheesemaker. If they use Polish milk, their final product might fail the origin test and be subject to punishing EU import duties when it arrives in Calais, destroying its competitiveness against a French rival. Automotive manufacturers, with their continent spanning supply chains for components like batteries and semiconductors, face an even greater challenge in documenting every part to satisfy the stringent requirements. This is the new reality. It is a daily grind of forms, codes and compliance costs that did not exist when Britain was inside the customs union.
Is rejoining 'quite simple'?
George Osborne believes rejoining is 'quite simple'. But is it? The practical mechanics suggest a process of enormous legal and political complexity. Returning to the customs union is not like renewing a gym membership or signing a single document. It is a fundamental renegotiation of the UK’s entire place in the global trading system, a process requiring the unanimous consent of all EU member states and one that would dismantle Britain’s entire independent trade policy, brick by brick.
The primary obstacle is a single, non negotiable policy. The Common External Tariff. This is the EU’s unified rulebook for taxes, or tariffs, on all goods imported from outside the bloc, from Argentinian beef and American cars to Chinese steel. To rejoin the customs union, Britain would have to adopt it without amendment or exception. The UK Global Tariff, the country’s own bespoke system of import duties painstakingly created after Brexit, would be abolished overnight. All control over setting these crucial tax rates would shift from the Treasury in London to officials in Brussels, leaving the UK in a position where it could be consulted on future changes but would possess no formal power to set or veto the rates applied to its own imports.
This creates an immediate, catastrophic problem for Britain's independent trade strategy. Those deals would die. Every single free trade agreement signed by the government since it formally left the EU in January 2020 would have to be terminated. The high profile agreements with distant partners like Australia and New Zealand, or the strategically important pact with Japan, would become legally impossible to honour. A country cannot simultaneously be in a customs union with a common tariff and have its own separate deals offering different tariffs to other nations. Britain would therefore lose its independent trade policy completely. It is the non negotiable price of entry. This is the central bargain of any customs union, gaining frictionless access to the internal market in exchange for pooling external trade sovereignty with the other members.
The diplomatic and administrative process would be anything but simple. Negotiators in Whitehall would face a truly gargantuan task. They would have to manage the complex, politically sensitive unwinding of multiple international treaties while simultaneously negotiating the precise terms of the new customs arrangement with the European Commission. The political fallout would be immense. Any government that pursued this would be accused of sacrificing the key sovereign benefit of Brexit for mere economic convenience, a charge that would resonate powerfully with the millions who voted to leave in 2016. It would also mean telling allies like Australia that the deals they spent years negotiating are now worthless pieces of paper. That is not simple. It is a diplomatic explosion.
The winners, the losers and the price of milk
The winners are obvious. They are the businesses choked by paperwork since 2021. Britain’s car manufacturers would celebrate loudest, as their highly integrated supply chains, which see components criss cross the Channel multiple times before a single vehicle is finished, would be freed from the constant burden of customs declarations and rules of origin checks. A factory in Sunderland could once again order parts from Stuttgart with the same ease as ordering them from Swindon. The agri food sector would be another major beneficiary. Queues of lorries at Dover filled with perishable goods would shrink, along with the veterinary and plant health paperwork that adds millions to the cost of importing fresh food. For these industries, it is about restoring frictionless trade. It is about survival.
The equation is not so simple for shoppers. Some prices would fall. The cost of importing a French cheese or a German car would almost certainly decrease as the tariffs and administrative burdens are stripped away, savings that retailers would be under pressure to pass on to consumers. But other prices could rise. This is the catch. By rejoining the customs union, the UK must adopt the EU’s common external tariff, applying it to all goods coming from outside the bloc. That bottle of Australian wine, which became cheaper thanks to the UK Australia free trade agreement, could suddenly become more expensive again if it were subject to the EU’s higher import duty. The same applies to electronics from South Korea, textiles from Vietnam or beef from Argentina. Britain would lose the power to lower these specific costs for its consumers.
This is the fundamental trade off. This trade off affects the price of milk. A government could no longer respond to a global price spike in a particular commodity by temporarily slashing import tariffs from a major non EU producer, as it would be bound by the common rules set in Brussels. The choice for a future chancellor would be stark, pitting the smooth running of factories in the Midlands against the ability to strike bespoke deals to lower the cost of the weekly shop with goods sourced from the wider world. George Osborne's proposal simplifies life for one set of businesses. It complicates it for everyone else.
Nobody in Westminster wants to listen
The politics do not work. For all the economic logic laid out by figures like George Osborne, his proposal on 13 September runs into a wall of political reality inside the Palace of Westminster. Nobody is listening. For the Conservative party, the idea is poison.
The party owns Brexit. Admitting its central project of the last decade had failed would be politically fatal, reopening internal wounds that have only just begun to scab over. It would mean civil war. Rejoining the customs union would require the government to abandon the independent trade policy that was sold to voters as a core prize of leaving the European Union. The party cannot countenance it. The political cost is too high.
Labour’s position is just as rigid, but for different reasons. Keir Starmer’s team has spent years trying to neutralise the Brexit issue, explicitly ruling out any return to the customs union or the single market. They want no part of this debate. Their electoral strategy depends on it. The leadership is fixated on winning back trust in seats that voted heavily to leave the European Union, making any policy that looks like a step back towards Brussels politically radioactive. Their stated aim is a closer trading relationship, maybe a new veterinary deal, but nothing that sacrifices Britain’s ability to sign its own agreements.
So the arguments fall flat. The economic case may be clear to a former chancellor, but the political case is a non starter for the people who actually have to win elections. For now, the silence from the government and the opposition front bench is deafening. They have made their calculations. Rejoining the customs union is not on the table.
Sources. Guardian Economics: George Osborne calls for UK to rejoin EU customs union and boost trade. Evening Standard: Former chancellor George Osborne says Britain should rejoin customs union.
Analysis. Drafted with AI assistance from the sources listed above and reviewed by an editor before publication. Jnews links to the organisations it writes about.
