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Liberal Democrat leader Sir Ed Davey has claimed his party is best placed to derail the Nigel Farage bandwagon at the next election, insisting the public and the city of London want to see a return to liberal politics and an end to Brexit.
Davy is starting 2026 with a renewed call for Britain to form a customs union with the EU, which he claims would boost growth and restore confidence in bond markets. “You’ll probably save several billions of dollars in loan costs.”
Speaking to the Financial Times, Davy said the Lib Dems could buck a global trend towards political extremes with a centrist message that embraces Europe and “traditional British values of tolerance, respect for the rule of law and decency”.
In the most recent Politico poll the Lib Dems were in fifth place with 13 per cent, behind Reform UK, Labour, the Conservatives and the Greens. But Davey said the political landscape was opening up for his party.
He argues that the Lib Dems can fight reform in his party’s southern heartlands and counter Farage’s party in areas such as the Midlands and the North, where Labor is in retreat.
“We are ready to evolve as a party in a way we haven’t in 100 years,” he said. “We are going to win a record number of seats. We are going to be a big surprise and a big player in the next parliament.”
Buoyant optimism is part of Davy’s political strategy, as evidenced by his election stunts and photo opportunities, but he insisted that this assessment was rooted in reality, despite the Lib Dems’ weak polling.
He pointed out that the party had won more council by-elections last year than the Conservatives, Labor and the Greens combined and predicted this would continue in May’s elections for the Scottish Parliament, Welsh Assembly and English councils.
“We have a record of leading local elections for seven consecutive years – we will maintain that record,” he said. “But I want to look at how we can do that in areas where Labor is disappearing and where we are the only ones who can beat the recovery.”
Davie’s argument is that the Lib Dems can strengthen their position in the south, where the party won most of its record number of 72 seats in the last election, while building a presence in the Midlands and former Labor territory in the north.
He said the Lib Dems’ prospects would be helped by a drift from the Conservatives under Kemi Badenoch towards reform on issues such as immigration, Europe and sympathy for Donald Trump.
He claimed the Tories would make “a compromise with reform” in a hung parliament – Badenoch has ruled out any compromise – which he said would displease many traditional Tory voters.
He described this prospect as “a coalition of the hard right, rejecting closer ties with Europe, embracing Trump America, destroying the British values that business cherishes”.
Davey is determined to step up his campaign to rejoin Britain into a customs union with the EU, arguing that Prime Minister Sir Keir Starmer will be exhausted unless he takes bold steps to boost economic growth.
He said the city has approval. “I’ve lost count of the business people and people in town talking to us in a way they never did before.” He said the gilt markets would welcome the Customs Union’s return to continued growth.
Davy acknowledged that this could mean Britain would have to negotiate with Brussels over the future status of trade deals struck since Brexit – including agreements with Trump and India – but argued that the benefits of customs union membership would outweigh any potential downsides.
“Europe is demanding closer ties with Britain,” he said, but he claimed Labour’s lack of ambition in areas such as the creation of a youth mobility scheme had convinced many European capitals that Britain was not serious about a transformed relationship.
Even though the Lib Dems finished fifth in the 2025 elections, Davey insisted he had “never been more ambitious” for his party. “Compare us to every other party in the House of Commons today and we are easily the most united, with the biggest smiles on our faces.”
Davie argues that in a fragmented political landscape – where five or more parties are competing for votes – the Lib Dems could move into the middle and win parliamentary seats with at least 30 per cent of the vote at the local level.
“I think there are a number of seats where Labor will have no chance of winning and people will either get a Reform MP or a Lib Dem.”
