This week marks half a decade since the UK formally left the European Union. Five years on from Boris Johnson’s deal, Labour and the EU are tentatively considering new arrangements. Depending on your perspective, this could be about evolving a previously underwhelming Brexit or unpicking the newfound freedoms it granted. Regardless, it is almost certain to reignite the political controversy around Britain’s place in Europe.

Speaking on Sunday, Chancellor Rachel Reeves signalled an openness, but not a commitment, to joining the Pan-Euro-Mediterranean Convention, something previously rejected by the Tories. This is not a customs union but a scheme for easing European trade between the bloc and surrounding countries. The main winners would be companies with complex supply chains stretching across the continent, which would find it easier to import, use, and re-sell parts originating from the EU, Balkans and North Africa.

There is a chance that this indicates a new type of post-Brexit politics, one characterised by reconciliation with Europe but within clear boundaries. While the last government seemed determined to say “no” to anything European, Labour is looking for a bespoke relationship with the EU — but at the moment, the party is firm that this does not involve the single market or customs union. Even without those steps, however, it starts to look like realignment by a thousand steps.

This could be an approach that disappoints everyone. For those pushing to rejoin, it might never be enough while at the same time stifling some of the broader trading opportunities Brexiteers have promised. In the context of Donald Trump’s tariffs, it is a real choice to pivot towards Europe, but one that could prove frustrating if the EU also clamps down further on external trade. There is an opportunity for Britain to play well as an outsider to both camps, as well as a risk that it becomes stuck between and buffeted by the two.

Politically, Labour thinks it is taking the safer option. Most polling now suggests that Brexit is unpopular and that the public favour closer relations with the EU than with the US. Even Tory leader Kemi Badenoch has admitted that the last government made a “mistake” in the way it handled withdrawing from the EU. Reeves and Keir Starmer hope they will benefit from a steady re-engagement with Europe, as some of the passion and vitriol of the Brexit years have subsided. For many, however, the issue remains highly contentious.

Rather than Labour, it could be Reform UK which benefits. Nigel Farage was always at his strongest politically when Brexit was on the table. It powered his rise through Ukip, and his first major swipe at the Tories came through the Brexit Party in the 2019 European elections. With Labour re-engaging with Europe and the Tories wavering on their record, Reform could position itself as the guardian of the one true Brexit.

This would suit the party. It would tie together its platform once again and would reinforce its link with pro-Brexit voters. Reform could lean into Farage’s American, pro-Trump links and demonstrate that it is a clear alternative to both Labour and the Tories. This could be electorally advantageous in seats where the party wants to take on the Conservatives, but also in the Labour heartlands where it needs to make inroads if it wants to be a real force in Westminster.

Five years on, Britain’s relationship with Europe is still influenced by the memories and passions of Brexit. Each move towards the Union, like the PEM, will be viewed through that lens. As trade becomes more globally contentious, Labour will struggle to avoid making big decisions on where it is going to prefer. Moves such as this start to look like favouring Europe, charting a new reconciliation. The question is whether the public will accept that, or whether the old tensions will flare.

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John Oxley is a corporate strategist and political commentator. His Substack is Joxley Writes.

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China is trying to catch up with America on artificial intelligence. The Wall Street Journal has reported that Zhipu AI — one of China’s six “AI tiger” LLMs — has released a new model that can rival leading US systems, including Anthropic’s Mythos, in cybersecurity tasks such as pinpointing security bugs. While this marks a milestone in China’s drive to catch up with Western AI capabilities, strong performance on a single benchmark does not mean it has taken the lead. Chinese models still lag behind their Western counterparts in broader capabilities, such as autonomous operation. Skepticism is therefore warranted before resorting to hysterical conclusions, but complacency about the geopolitical implications of China’s AI advances would be an even greater mistake.

On the infrastructure side, Chinese AI is still constrained by access to advanced chips, with American labs way ahead in computing capacity as well as investment. Analysis from earlier this year suggests that Chinese models are likely to be at least a few months behind those in the US. But they are still continuing to make progress, or that the geopolitical importance of AI will be decided only by whose LLM has ventured deeper into the technological frontier. The practical applications of AI, countries’ to capture foreign markets, and the application of AI into the real economy will matter just as much.

Here, China may hold an advantage. As with its dominance across many critical supply chains, Beijing may not need to produce the most advanced AI systems — only those that are affordable and widely deployable. In doing so, it could consolidate global influence by supplying functional, low-cost AI at scale.

Beijing seems to be pursuing exactly that path, developing an AI “open-source” strategy that offers affordable, widely available AI models for companies and individuals to use and modify as they wish. The production of the DeepSeek AI model, which matched the performance of Silicon Valley tools such as ChatGPT at a fraction of the cost for users, created goodwill among Chinese models with developers.

The four most popular models on OpenRouter, an AI hardware platform for developers, are now all Chinese. The goal for China is not only to win the frontier-model race, but to make its systems the default layer of AI adoption across industries and global markets. For most economies, the choice is increasingly between an affordable tool they can deploy now and a more robust one that may be out of reach.

And while the countries adopting Chinese models may be exposed to political pressure and cyber threats from Beijing, safer and more capable alternatives matter little if they are unaffordable. American AI companies are already under pressure to monetize products whose operating costs are rising. If Chinese open-source models become the cheap default for startups, universities, governments and businesses across the developing world, then America’s AI lead will be eroded from below.

Perhaps more concerning for America in the long run is how AI can give Chinese manufacturing even more strength, through the ongoing integration of AI as a general-purpose technology. China’s new Five-Year Plan mentioned AI more than 50 times and includes an “AI+” action plan aimed at spreading AI across the economy.

Beijing has been pioneering automation of its critical infrastructure for years, with promising recent results in increasing warplane production capacity. In that regard, China’s open-model strategy and manufacturing dominance will reinforce each other. Cheap, adaptable models accelerate deployment across the real economy while those deployments generate real-world data and use cases that can feed back into further model improvement.

The United States should not dismiss the importance of its lead in the AI race. That lead worries Beijing, not least because a more automated Chinese economy would also become more vulnerable to AI-generated cyber threats. But nor should Washington assume that China cannot catch up with American capabilities over time.

This AI competition represents part of a broader struggle over tech supply chains and geopolitical influence. Decisions over whether to adopt US or Chinese models could produce a more fragmented global reality, with different regions relying on different cloud providers, chips and security structures. The result will likely be a global economy which is divided into competing spheres, rather than one which produces a single winner.

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Miquel Vila is a political and geopolitical risk consultant focusing on industrial strategy, critical infrastructure and global supply chains.

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