Leading economists and diplomats say Keir Starmer’s Labour government cannot maximise Britain’s economic growth unless it returns the country to the European Union’s single market and customs union.
The warning was published in an Opinium poll. Observer The survey found that 56% of voters believe Brexit has been bad for the UK economy overall, while just 12% think it has been economically beneficial.
Some 62% of those surveyed believe Brexit has led to higher prices in stores, while 8% think it has had the opposite effect.
With less than two weeks to go, Labour has extended its lead over the Conservatives to 20 points and is on track to win a comfortable majority in the House of Commons.
But pressure is growing on Starmer and shadow chancellor Rachel Reeves to clarify how they plan to deliver manifesto promises to ensure sustained economic growth the fastest of any G7 country, while sticking to strict fiscal rules and with trade barriers between Britain and the EU remaining in place after Brexit.
The Office for Budget Responsibility has said that Britain’s GDP would be around 4% lower each year than if it had remained in the EU.
Campaigning in south London on Saturday, Starmer insisted the UK would not rejoin the EU in either the short or long term. “We will not rejoin the EU, we will not rejoin the single market, we will not rejoin the customs union,” the Labour leader said.
Asked if he would reconsider this, he added: “No. That’s not our plan and never has been. I’ve never said that as leader of the Labour Party and it’s not in our manifesto.”
EU leaders are said to be determined not to allow a Starmer government to “cherry-pick” preferential economic relations without paying the EU budget or allowing freedom of movement, but Mr Starmer said he “still believes we can get a better deal with the EU and if I get into government we will work to get that done”.
But economists say without access to the single market, which would allow the UK to import and export goods to the EU without extra costs or paperwork, its economic development would be seriously hampered.
Dimitri Zenghelis, an economist and Brexit expert at the London School of Economics, said the additional barriers since 2020 have reduced trade with the EU and discouraged investment.
He said Labour’s plans to negotiate a more moderate approach with the EU “will change the mood of foreign investors”, but only by rejoining the single market and customs union “can the UK change course in a meaningful way”.
A report published last week by the London Stock Exchange said the Trade and Cooperation Agreement signed by then-Prime Minister Boris Johnson on 30 December 2020 “led to a drop in small business exports to the EU of around 30%” and “probably caused around 20,000 small businesses to stop exporting goods to the EU altogether.”
The department warned the incoming administration that any trade deals with countries outside the EU would have little impact on trade flows.
Professor Stephen Millard, from the National Institute of Economic and Social Research, who worked at the Bank of England for 26 years, said it was clear that joining the single market would boost trade and competition. [as full members of the EU] That way we can expect higher growth. There is no doubt that we will enjoy higher growth if we have closer ties with Europe.”
Kim Darroch, a former EU permanent representative in Brussels, described Brexit as economic “self-inflicted wounds”, while another senior EU diplomat said: “We used to be a much more efficient trading nation than we are now. Brexit is the cause of that. There’s no getting around it.”
According to an Opinium poll, 56% of voters currently want closer ties with the EU, while 32% want full rejoining of the bloc.
With Brexit becoming a bigger issue in the election north of the border, the Scottish National Party (SNP) yesterday highlighted comments made by John Wheeler, the Conservative candidate for Aberdeen South, during the campaign that Brexit would “not be good for many businesses in Aberdeen and the North East”.
writing Observer Labour’s national campaign coordinator, Pat McFadden, warned against the idea that the party would win a landslide election victory.
The Conservative party has grown increasingly desperate in the election campaign following recent revelations that senior figures were betting on a general election for 4 July before Rishi Sunak declared it, but McFadden says the outcome is by no means decided.
Apparently worried about creating complacency, he writes: “It’s one thing for a poll to take a snapshot of public opinion; it’s quite another for it to influence voting behaviour, especially when it’s reinforced by the Conservative Party’s cynical voter suppression strategy of telling people the outcome is known and they don’t need to bother voting.”
“This election is by no means settled. Headlines about uncertainty in the MRP polls hide much greater uncertainty.”
“Up to 20% of voters who participated in these polls said they were still undecided or didn’t know how they would vote. This could easily amount to 4,000 to 5,000 people per constituency. No wonder one poll said 175 seats were undecided.”
