It is now official. Brexit has done lasting damage to Britain’s economy and, with the Tories in denial, Labor must lead the way with a new political agenda.
Yet it’s almost a taboo subject: the Conservative government won’t admit it and Labor is understandably reluctant to rekindle the old Brexit flames.
The Governor of the Bank of England, the Office for Budget Responsibility (OBR) and the Organization for Economic Co-operation and Development (OECD) all agree that, notwithstanding Covid or the war in Ukraine, Brexit is the main reason for which the UK is the only G7 economy still below its pre-pandemic size.
Real wages fell by 2.9% after Brexit, according to the Resolution Foundation. Researchers from the London School of Economics found that Brexit triggered a 6% rise in food prices in the two years to the end of 2021. Business investment, hampered by post-Brexit uncertainty , has also stagnated since 2016, relative to EU and US trends.
Since 2021, trade growth for the UK has been below the G7 average, reflecting non-tariff barriers after Boris Johnson’s Brexit deal.
The OBR found that UK trade was 15% lower than what we would have done if we had stayed in the EU. Tory leaders have promised a new nirvana of foreign trade deals now that the UK has “break free” from the EU. Yet among the very few new deals, Liz Truss’ much-heralded deal with Japan actually saw exports to Japan fall by £0.4bn, or 3.2%.
Its deal with Australia has been denounced as “not really a very good deal for the UK” by former pro-Brexit minister George Eustice.
When it comes to the promised ‘bureaucratic bonfire’ for businesses, Brexit has actually piled on the paperwork and extra costs for businesses trying to access our largest and closest market. The chemicals industry has spent £2billion to comply with twice Britain’s EU regulatory system without any benefits, leading the Treasury to admit the UK’s divorce bill could be as high as 42.5 billion, up to £7.5 billion more than originally expected.
This kind of nightmare will only be repeated for many other sectors of the UK economy if the abominable “Brexit Liberties Bill” ever becomes law. This would undo, by the end of 2023, around 3,800 EU measures, which were pursued by Theresa May’s administration to provide businesses with regulatory certainty after the referendum result. The resulting chaos would also be incompatible with Johnson’s UK-EU Trade and Cooperation Agreement requirement to maintain a level playing field with the single market so that the UK retains duty-free access.
Brexit, supposed to ‘control’ immigration, has in fact led to both chronic labor shortages and a dramatic increase in net migration in the year to June 2022, reaching a record high. of 504,000 – deeply ironic given the racist overtones of much of the Brexit campaign.
As these Brexit failures become more evident, support for Scottish independence appears to be growing. Unless Labor does something about it, we could achieve independence driven at least in part by Brexit, which Nicola Sturgeon continually insists on in her view.
Brexit turns out to be a disaster and if re-launching a referendum is out of the question, how do you ‘make Brexit work’, to quote Keir Starmer?
Even if the real solution – joining the single market and customs union – is ruled out for the foreseeable future, there are a number of practical steps that Labor as a new government should prioritize.
First, restore trust. No one at the top of the EU trusts the UK anymore. And why should they, after the signing of the treaties by the conservatives, break them? Yet, without mutual trust, negotiations aimed at resolving problems will not succeed – I know this as a former minister for Europe.
Like ironing out unnecessary travel restrictions (such as the “90 day limit in 180 days” for British citizens, whether on business or tourism, within the Schengen area).
Most urgent is to settle the Northern Ireland protocol, which triggered a collapse of Stormont’s self-government. Having investigated protocol as a member of a Lords committee for over a year, I know how it can be done, but it requires give and take on both sides, in particular less fundamentalism and more direct driving from the UK.
Based on the EU-UK Trade Agreement, we must ensure that a ‘level playing field’ in regulation is maintained. Allowing, for example, Nissan Sunderland to continue to export 70% of its production to Europe.
Cooperation on energy policy is essential, including on net zero and on security of supply (as we depend on imports from continental Europe for around a third of our energy).
Britain faces a multiplicity of crises that can only be overcome in cooperation with our immediate European neighbours: catastrophic climate change, war in Ukraine, economic growth, energy accessibility and security.
It is high time we all faced the Brexit fantasy of a ‘sovereign global Britain’. The writing is on the wall. Our destiny lies, if not within, at least with Europe – and Labor needs practical policies to achieve this. Something, given the current prosperity-killing mess, that even Brexit voters would surely appreciate?
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