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UK and EU Near Temporary Fix to Shield British Firms From EU Carbon Border Tax

Officials are negotiating a short-term fix to cushion UK exporters pending a permanent emissions‑trading link.

Overview

  • The EU’s carbon border adjustment mechanism takes effect on 1 January, while the UK’s own measure is planned for 2027, creating a timing gap that threatens new costs for British exports.
  • Both sides are working on technical mechanisms viewed as likely to limit the levy’s impact on UK businesses, as a formal exemption is not permitted under EU law.
  • Industry groups warn UK exporters could face roughly £800m in payments and that consumer energy bills could rise without an interim arrangement.
  • Northern Ireland presents particular complications given its alignment with the EU single market for goods and the risk of a new regulatory border on the island.
  • The talks form part of a wider Brexit reset that also includes expected UK participation in an EU rearmament fund by mid‑November and ongoing negotiations over a youth mobility scheme.