Ahead of tomorrow’s Spring Statement, rumours suggest Chancellor Rachel Reeves has a £15 billion hole in her budget, partly due to higher borrowing costs and a downgrade in forecasted growth for the UK economy.
Labour’s red lines must be revised
Labour’s ‘red lines’ on its relationship reset with the European Union, including no return to the Single Market or the EU Customs Union, must now be revisited and revised. The reasons why will not have escaped the Chancellor’s notice, even if she does not want to look in their direction.
- Brexit is on course to cut UK trade intensity by 15%, the Government’s independent financial watchdog has warned. (Source: OBR)
- Brexit has cut the UK economy by £140 billion, while London’s economy has lost more than £30 billion. The same report suggests the UK will be more than £300 billion worse off by 2035. (Source: Cambridge Econometrics)
- The CER uses a similar estimate, putting the economic loss at 5% of UK GDP, or around £130 billion. (Source: CER)
- The average Briton was nearly £2,000 worse off in 2023, while the average Londoner was nearly £3,400 worse off. (Source: Cambridge Econometrics)
Supercharged reset
A closer relationship with the EU, via a supercharged ‘relationship reset’, can in the relatively short-term boost growth and generate resources. This reset must include not only defence but also a food safety deal, an agreement on youth mobility and a commitment to greater alignment with the EU on standards.
Dr Mike Galsworthy, Chair, European Movement UK, said:
“Getting the UK back in the Single Market and the Customs Union is a prerequisite for creating sustained growth that can improve opportunities for British people across the board. We simply have to be forward thinking about how we, alongside our European allies, and pressed by Putin and Trump, rise to a huge challenge. The answer lies in forging our own European strong defence, strong economies, strong R&D, strong standards & values. Yesterday’s apologetic self-imposed political shackles simply do not apply in any sensible assessment of what the United Kingdom needs right now.”
Professor Molly Scott Cato, Economist and Senior Vice-Chair, European Movement UK, said:
“Reeves’s inevitable announcement in her spring statement of ‘hard choices’ will be greeted with groans, but also begs an important question: why does she find the choice of rejoining the EU so hard to contemplate? The cruel cuts to the most vulnerable would not be necessary had we not squandered billions through the economic self-harm of Brexit. With Trump in the White House and a trade war threatening, she should take heed from Keynes who famously said: “When the facts change, I change my mind. What do you do, sir?”
This article is based on a media release from EMUK
