Amber Rudd hints the UK could stay in the customs union

When Britain stays in a custom union with Brussels (the European Commissions headquarters is pictured) is one of the main points of Brexit contention

The customs union and single market have emerged as crucial battlegrounds in the struggle over Brexit.

The customs arrangements could decide the fate of the overall deal – as the UK has already said it will ensure there is no hard border between Northern Ireland and the Republic. 

Here are the main options for what could happen after Britain leaves the bloc.

Staying in the EU single market

A Norway-style arrangement would be the deepest possible without formally staying in the EU.

The single market rules out tariffs, quotas or taxes on trade, and guarantees free movement of goods, services, capital and – controversially – people.

It also seeks to harmonise rules on packaging, safety and standards. 

Staying in the EU customs union

The customs union allows EU states to exchange goods without tariffs, and impose common tariffs on imports from outside the bloc.

But they also prevent countries from striking deals outside the union.

Theresa May has repeatedly made clear that the UK will be leaving the customs union.

Forging a new customs union

Some MPs and the Labour leadership have raised the idea of creating a new customs union with the EU.

This could be looser than the existing arrangements, but still allow tariff free trade with the bloc. 

However, many Eurosceptics believe it is impossible to be in a union without hampering the UK’s ability to strike trade deals elsewhere.

They also complain that it would mean accepting the EU’s ‘protectionist’ tariffs against other parts of the world in areas like agriculture.

The PM has also ruled out this option. 

A customs partnership

Less formal than a union, this proposal would seek to cherry pick the elements that facilitate tariff-free trade – without binding the UK’s hands when it comes to deals with other countries.

One possibility could be keeping the UK and EU connected for trade in goods, but allowing divergence for the services sector.

The partnership option was floated by the government in a position paper last year.

‘Highly streamlined’ customs

This scenario would be a ‘bare minimum’ customs arrangement between the EU and UK.

New technology would be deployed alongside a simple agreement to minimise friction.

But there are fears that this could hit trade, and it is unclear how the system would work with a ‘soft’ Irish border.