UK’s Burnham said poised to ban trade with settlements; critics fear ‘de facto boycott’ of Israel

Reported move would be part of British response to E1 settlement expansion plan; some Labour officials warn it would be difficult to enforce; 140 party MPs sign letter of support

Britain’s Prime Minister Andy Burnham reacts as he meets with local business owners and guests during a visit to The Hub Cafe in Ilkeston, Derbyshire, England, August 11, 2026. (Toby Shepheard/Pool Photo via AP)

New UK Prime Minister Andy Burnham is preparing to announce a complete trade ban on goods from Israeli West Bank settlements, British media reported on Wednesday.

The move has sparked opposition from pro-Israel voices in his Labour Party.

According to The Telegraph, the full trade embargo on all settlements could come in response to Jerusalem’s plan for a major, controversial settlement expansion in the hot-button EI area of the West Bank, which would block territorial contiguity between major Palestinian population centers.

At the same time, The Times reported Burnham could also enact sanctions against far-right ministers in the Israeli government and against individual settlers. The UK already sanctions and bans entry to National Security Minister Itamar Ben-Gvir and Finance Minister Bezalel Smotrich.

Britain warned Israel earlier this month that it considered the E1 settlement expansion to be “unacceptable and destructive,” and UK Secretary of State for Foreign Affairs Ed Miliband said his office was working to prepare a “comprehensive set of measures” in response, including sanctions against “those who participate in illegal settlement expansion.”

The measures come amid a series of condemnations of the Israeli plan from European and Middle Eastern governments.

The planned E1 expansion would connect the Jerusalem and Ma’ale Adumim areas, effectively scuttling the prospect of contiguous Palestinian sovereignty between the population centers of Bethlehem, East Jerusalem and Ramallah — long considered the basis of a future Palestinian state.

The project was frozen for years amid fierce opposition from the international community, including past US administrations, which feared that building a new settlement neighborhood on the mostly empty tract of land would rule out the establishment of a Palestinian state.

Supporters of the E1 settlement expansion say they want to block Palestinian statehood. Last week, the government issued a tender for construction of seven residential compounds with 1,234 housing units in the E1 area, after greenlighting the construction of roughly 3,400 units last August.

Finance Minister Bezalel Smotrich attends a press conference announcing his plans to approve more than 3,000 housing units in the E1 West Bank settlement project between Jerusalem and Ma’ale Adumim on August 14, 2025. (Yonatan Sindel/Flash90)

Burnham, who entered 10 Downing Street on July 20, has taken a harder line against Israel than his predecessor, Keir Starmer.

In a leadership campaign video earlier this year, he said Britain should “do more to put pressure on the Israeli government,” including by considering further restrictions on arms exports and action against West Bank settlements.

Ireland, Belgium, Spain and the Netherlands have already placed restrictions on trade with the settlements. But the move may prove divisive within the Labour Party, according to the Telegraph, which reported that some ministers and civil servants have warned that it would be difficult to enforce.

Labour Friends of Israel warns of ‘de facto boycott’ of whole country

Among those opposed to the move is Labour Friends of Israel, a pro-Israel advocacy group within the center-left party.

In a lengthy statement on the matter on August 20, the group — which trumpets its support for the establishment of a Palestinian state alongside Israel — notes that major Israeli companies operate in areas that would be covered by the ban. Those include East Jerusalem, which Israel has annexed and considers part of its capital and sovereign territory.

Israeli forces stand guard during a raid on the UNRWA Vocational Training Center, located between the Kafr Aqab neighborhood and the Qalandiya refugee camp, in East Jerusalem, August 25, 2026. (Zain JAAFAR/AFP)

Because the Israeli economy is so intertwined with the settlements, and because companies tend to err on the side of caution in complying with such boycotts, the ban could amount to a “de facto boycott” of Israel as a whole.

“It would affect all Israeli businesses operating in the settlement blocs, as well as East Jerusalem and the Old City, where major Israeli businesses like Bank Hapoalim and Teva operate, and where the tourism sector is critical for Israeli and Palestinian workers,” the statement said. “There is a risk that international financial actors overcomply with sanctions nominally targeting settlements, adversely affecting Israelis living within the state’s borders.”

It continued, “A settlement boycott would thus become a de facto boycott of all of Israel, which would rightly be perceived within the UK Jewish community as a further example of the government singling out and targeting Israel for punitive action and harsh rhetoric.”

A spokesperson for the group also told the Telegraph that if imposed now, weeks before the October 27 election in Israel, the ban could unintentionally contribute to the “‘siege mentality’ of the Israeli right” and harm the chances of the opposition parties, which Labour Friends of Israel believes “will bring about a substantive change in direction” if successful at the ballot box.

However, the report said around 140 Labour MPs have signed a letter in support of the move, and the issue is expected to be discussed at the annual Labour Party conference in September.

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