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In a bold assertion, Sir Ed Davey, leader of the Liberal Democrats, has positioned his party as the most capable of halting Nigel Farage’s momentum in the upcoming election. He maintains that both the general public and financial hubs like the City of London are eager for a shift back to moderate politics, which includes revisiting and potentially reversing some aspects of Brexit.

As we step into 2026, Davey is pushing a vision for Britain that involves establishing a customs union with the European Union. He argues that such a move would not only stimulate economic growth but also bolster confidence in the bond markets, potentially saving billions in debt-related expenses.

In a conversation with the Financial Times, Davey expressed confidence that the Liberal Democrats can defy the global trend toward political extremism. By advocating for a centrist approach that champions European cooperation and upholds core British values like tolerance, adherence to the rule of law, and decency, he believes his party can carve out a unique position.

Despite the Liberal Democrats currently ranking fifth in a recent Politico poll, trailing behind Reform UK, Labour, the Conservatives, and the Greens with 13 percent, Davey is optimistic about his party’s prospects. He sees a political landscape increasingly favorable to the Lib Dems.

Davey’s strategy is to fend off Reform UK in the party’s traditional strongholds in the south while also challenging Farage’s influence in regions such as the Midlands and the north, where Labour’s support appears to be waning.

“We are ready to grow as a party in a way that we haven’t in 100 years,” he said. “We are going for a record number of seats. We are going to be a big surprise and a massive player in the next parliament.”

Cheery optimism is part of Davey’s political schtick, as illustrated by his electoral stunts and photo opportunities, but he insisted this assessment was rooted in reality, in spite of the Lib Dems’ anaemic polling.

He pointed out the party had won more council by-elections in the last year than the Conservatives, Labour and Greens combined and predicted that this would continue in May’s elections to the Scottish parliament, Welsh assembly and English councils.

“We have had a record seven years of successive gains in local elections — we’re going to keep that record going,” he said. “But I want to see how we can do in areas where Labour is just disappearing and where we are the only ones who can beat Reform.” 

Davey’s logic is that the Lib Dems can strengthen their position in the south, where the party won most of its record number of 72 seats at the last election, while building a presence in former Labour territory in the Midlands and north.

Lib Dem prospects will be aided by the drift of the Conservatives, under Kemi Badenoch, towards Reform on issues like immigration, Europe and a sympathy for Donald Trump, he said. 

He claimed the Tories would “do a deal with Reform” in a hung parliament — Badenoch has ruled out any pact — which he said would repulse many traditional Tory voters.

He described the prospect as a “coalition of the hard right, rejecting close ties with Europe, embracing a Trump America, trashing British values that business has loved”.

Davey is determined to pursue his campaign for Britain to rejoin a customs union with the EU, arguing that Prime Minister Sir Keir Starmer will be finished unless he takes bold moves to bolster economic growth.

He said the City approves. “I’ve lost count of the number of business people and in the City talking to us in a way they haven’t before.” He added that the gilt markets would welcome a return to the customs union as a route towards sustained growth.

Davey conceded that could mean Britain having to negotiate with Brussels over the future status of trade deals done since Brexit — including agreements with Trump and India — but argued that the benefits of customs union membership would outweigh any potential downsides.

“Europe is crying out for closer relations with Britain,” he said. But he claimed that Labour’s lack of ambition in areas like the creation of a youth mobility scheme had convinced many European capitals that the UK was not serious about a transformed relationship.

Even though the Lib Dems finished 2025 in fifth place in the polls, Davey insisted he had “never been more ambitious” for his party. “Compare us with every other party in the House of Commons today and we’re easily the most united, with the biggest smile on our face.”

Davey argues that in a fractured political landscape — with five or more parties vying for votes — the Lib Dems can come through the middle and win parliamentary seats with as little as 30 per cent of the vote locally.

“I think there are a number of seats where Labour will have no chance of winning and people will either get a Reform MP or get a Lib Dem.”