As the chancellor ekes out every last billion this week, it’s worth stepping back and remembering one key reason why Britain fares worse than its neighbours: Brexit. On Monday, MPs debated whether to rejoin the EU following the success of a public petition that gained 134,000 signatures. Don’t hold your breath. The government replied by quoting its not-until-hell-freezes-over manifesto pledge: “there will be no return to EU membership”. But the global Trumpquake has shaken all certainties, upended all that seemed solid. The European defence emergency has made talk of Brexit and its future less taboo on both sides of the Channel. Close observers note the ice breaking. “Things are moving in the right direction,” says Charles Grant of the Centre for European Reform (CER).
Nonetheless, Labour is so paralysed by Brexit that despite its hunt for growth, it has said nothing about the monumental sums that leaving the EU have cost the economy. Estimates vary, but the CER sets our losses at 5% of GDP. That’s a vast sum: 1% of Britain’s GDP is worth £25.6bn. Goldman Sachs’s calculations are similar. Researchers at the London School of Economics found that the UK lost £27bn in exports to the EU in the first two years; the Office for Budget Responsibility (OBR) reckons Britain has seen a 15% reduction in trade.
Last week Policy Exchange, a pro-Brexit thinktank, tried to salvage some shred of Brexit’s reputation, but to no avail. Sifting through the statistics, even it couldn’t find any Brexit advantages. Try as it might to produce a positive narrative, its report Less Than Meets the Eye could only attempt to limit the damage. It concluded that the OBR’s 15% trade reduction was “greatly exaggerated – and that the real impact is only a small fraction of what has been assumed”.
Out tumbles more bad Brexit news. This month the Food and Drink Federation reported that its exports to the EU, much its biggest market, were down by 34%. The National Institute of Economic and Social Research found that businesses now invested 12.4% less than they would have done if Brexit hadn’t happened. The City lost 40,000 finance jobs soon after Brexit: those high earners who have departed Britain lost the Treasury £1bn a year in tax.
You want more? Brexit is a key factor in the worst UK medicine shortages in four years, the Nuffield Trust reported this month. I have folders full of similar figures, but let’s leave it with this from the thinktank UK in a Changing Europe: “Five years on and Brexit still defines the UK economy … and will continue to.” In the long term, forget budgets picking over a little taxing and cutting here and there as Britain falls further behind. Rachel Reeves is right to call growth our only hope. But Brexit is a great drag on that ambition. Even if the UK schmoozes itself into avoiding Donald Trump’s very worst tariffs, the EU is still our biggest market.
“The world has changed,” the chancellor told the BBC. The doubt is whether the government is changing fast enough to repair the pain caused by Brexit. Now is the moment to speak honestly about Brexit’s colossal harm. Most know it already, according to the polls. Even 54% of Britons who voted leave, including 59% of voters in “red wall” seats, say they would accept free movement for UK and EU citizens in exchange for single market access.
Most politicians shudder at any rerun of the poisonous referendum, but it’s good to keep preparing the ground, as with this latest Westminster debate, even while the government fails to follow changing public attitudes. Keir Starmer has called for an “ambitious UK-EU defence and security partnership”, but France has blocked British defence companies from accessing a €150bn (£125bn) European defence fund. How the Brexiters celebrated. “So much for the Brexit reset!” sneered the Mail. Grant of the CER is optimistic that the French will fall in with the rest of the EU, and that Britain will get access the fund. Behind the scenes, UK ministers and their EU counterparts have been shuttling across the Channel for meetings.
The three asks in Labour’s manifesto are important: a veterinary deal to let food cross the border, a mutual recognition agreement for professional qualifications and performing artists free to travel, not yet agreed by the EU. Youth mobility looks likely to be agreed for the 19 May EU-UK summit. But these measures won’t yield much economic benefit. The CER’s John Springford calculated they will only add 0.3-0.7% to UK GDP.
Labour is jumpy at even mentioning youth mobility, but it’s time to resist the Home Office and take all students and young temporary residents out of migration numbers. Starmer’s adept handling of Ukraine has won goodwill for Britain, but the EU will stay dubious about a country that assaulted it – and all it stands for. It would help restore trust in UK good faith if they saw him facing down the Brexiters and their noisy media, now barely more than a minority cult, so mad they even explode with fury at the UK aligning with the EU’s universal phone chargers.
There is a destination Britain should aim for: Switzerland. It has just renegotiated its complex patchwork of EU agreements, partly in the single market, for goods only. It has food and product safety agreements dynamically aligned, keeping up with changes and covering electricity trade, which Britain wants too. It’s inside the Horizon and Erasmus funding programmes (for research and education and training respectively). It allows freedom of movement, with the same “emergency brake” that Cameron originally agreed. However inflexible the EU seems, Switzerland shows painstaking deals of mutual advantage can crisscross the apparently rigid single market rules.
Making the Blair/Brown mistake of never explaining to voters the value of the EU, Starmer doesn’t dare make bold speeches to Britain about his EU reset. It’s time he did. He might find he attracts great respect for telling the truth about what Brexit has done to us, by daring to confront the Brexiters head on.
Polly Toynbee is a Guardian columnist
