Britain is working with the European Union to resolve concerns over the bloc’s proposed “Made in Europe” rules, which could disadvantage UK manufacturers in public procurement and clean-technology markets unless London secures favorable treatment under the emerging framework.
Business Minister Jonathan Reynolds said on Tuesday that discussions between the two sides were progressing as companies sought clarity on proposals that could influence investment decisions across the automotive, battery and wider clean-energy industries.
“I think we’re finding a way through that,” Reynolds told Sky News. “A lot of work is going on in government between ourselves and the EU to find a way through that”.
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The proposed rules form part of the EU’s efforts to strengthen domestic industrial production and reduce dependence on cheaper imports, particularly from China. They would favor European-made goods in public procurement, auctions and subsidy schemes covering sectors such as electric vehicles, batteries and other clean technologies.
For British manufacturers, the outcome could have significant commercial implications. Companies operating in the UK could face disadvantages when competing for publicly supported projects or accessing incentives designed to encourage production within the EU, depending on how the final rules define eligible goods and participating countries.
The uncertainty bears high implications for Britain’s automotive industry, which is closely integrated with European supply chains and relies on access to the EU market. Manufacturers make investment decisions years in advance, meaning uncertainty over subsidies, procurement eligibility and local-content requirements could affect where companies choose to build factories, source components and expand production.
Reynolds did not disclose the details of any emerging agreement, but his comments suggest that both sides are seeking to prevent the proposed framework from creating a deeper industrial divide between Britain and the EU.
Reuters reported earlier this month that France and Germany were discussing a possible compromise under which Britain could be treated as a trusted partner under the scheme if it agreed to align with the bloc on tariffs on Chinese goods.
Such an arrangement could give UK manufacturers more favorable access to certain EU-supported industrial opportunities while helping Brussels pursue its objective of reducing reliance on Chinese imports.
The proposal also exposes a difficult trade-off for Britain. Securing preferential treatment could protect manufacturers whose operations depend on European customers and supply chains. However, agreeing to align tariffs with the EU on Chinese goods could constrain London’s freedom to set its own trade policy towards the world’s second-largest economy.
The issue is particularly sensitive because the UK and EU are no longer operating within the same trade-policy framework following Brexit. Any arrangement that links access to industrial incentives with tariff alignment could require Britain to weigh the commercial benefits of closer cooperation against the flexibility it has sought to retain over its external trade relationships.
The challenge for the EU is to encourage investment within its industrial base without unnecessarily disadvantaging neighboring economies whose manufacturers contribute to European production networks. For Britain, the priority is to prevent its departure from the bloc from translating into a structural disadvantage for industries that remain commercially tied to the European market.
The automotive sector illustrates the stakes. Electric-vehicle production depends on interconnected networks of vehicle assembly plants, battery manufacturers, component suppliers and logistics providers. If public subsidies or procurement preferences favor production within a narrowly defined European area, the rules could influence the relative attractiveness of manufacturing locations.
The precise effect on British businesses hinges on the final eligibility criteria, including whether UK-produced goods qualify under any trusted-partner arrangement and what conditions London would need to meet.
Any agreement or revised proposal would still need approval from EU member-state governments and the European Parliament. Reynolds’ comments therefore indicate ongoing efforts to find common ground rather than confirmation that Britain has secured an exemption or preferential status.
The negotiations also carry implications beyond the immediate question of market access. As governments increasingly use subsidies, procurement rules and industrial policy to support domestic production, the boundaries of eligibility can shape investment flows as much as tariffs do.
For companies deciding where to manufacture batteries, assemble electric vehicles or establish clean-technology operations, access to government-backed incentives can influence project economics. Even when goods can legally enter a market, losing eligibility for subsidies or public contracts may weaken their competitive position.
The situation has created pressure on British policymakers to secure arrangements that provide manufacturers with sufficient certainty to commit capital. At the same time, Brussels must determine how far it is willing to extend preferential treatment beyond the EU while maintaining the industrial-policy objectives behind the proposed rules.
A compromise is expected to help preserve integrated supply chains and reduce the risk of companies shifting investment to qualify for European support. For now, the negotiations remain unresolved. Britain is seeking to protect its manufacturers from being excluded from opportunities created by the EU’s industrial policies, while the bloc is trying to strengthen its production base and reduce exposure to Chinese imports.