UK NEWS WEBSITE OF THE YEAR

UK and EU close to deal to protect British businesses from new carbon tax

Admin, The UK Times
03 Oct 2025 • 04:49 am
UK and EU close to deal to protect British businesses from new carbon tax

UK and EU close to deal to protect British businesses from new carbon tax

The UK and the EU are likely to agree on a temporary deal that will protect British businesses from a new carbon tax due to start in 2026. Officials aim to finalise it by the next UK-EU summit in late spring.

The EU’s new carbon border tax, called the Carbon Border Adjustment Mechanism (CBAM), begins on 1 January 2026. It will apply to imports of products made with high carbon emissions, such as steel, glass, and fertiliser.

UK businesses fear the tax could raise consumer prices and allow cheap products, like Chinese steel, to be redirected to the British market.

The UK is planning its own version of this tax, but it won’t start until 2027. Until then, UK ministers are asking for an exemption from the EU’s tax.

Sources say both sides are working on a solution that would protect British exporters, and they believe a temporary deal is now very likely.

Such an agreement would help companies trading with the EU. It follows progress at the last UK-EU summit in May, where Prime Minister Keir Starmer and European Commission President Ursula von der Leyen agreed to connect the UK and EU carbon systems and announced a defence and security pact.

A separate deal is also expected soon that would let UK defence firms join EU-funded military projects, with the first applications due by the end of November.

The EU and UK are discussing a deal that would let thousands of young people live and work in each other’s countries for a short time.

Chancellor Rachel Reeves said last week that the government wants a strong youth mobility scheme that would help the economy, support growth, and be good for business.

She told The Times that talks are happening on how many young people could join each year, what their age limits would be, and how long they could stay.

At the Labour party conference in Liverpool, Foreign Office minister Stephen Doughty said the UK is working on “a wider reset with all of Europe.” He said this is about Britain returning to the world stage, working with Europe as a partner for peace, prosperity, and progress.

A Cabinet Office source said the government would not comment during the negotiations.

Naomi Smith, head of Best for Britain, a group that has supported this move since May 2023, said that some big international investors have warned that differences between the UK and EU on carbon taxes could hurt jobs and investment.

She added that this new scheme would cut costs and paperwork for businesses in both the EU and UK, while boosting Britain’s economy. She also urged the government to work with European partners to match Britain’s carbon tax system with the EU’s for long-term benefits.

Published: 3rd October  2025

For more article like this please follow our social media Twitter, Linkedin & Instagram

Also Read:

Top Global ESG Investment Trends Driving UK Fund Strategy
Business Rates in 2025: Are UK Retailers Finally Getting Relief?
Green Buildings and ESG: The Future of UK Real Estate

More Topics