Sir Keir Starmer’s decision to rule out a return to the single market and customs union post-Brexit has been highlighted by a recent report as a missed opportunity for the UK, according to a warning by a think tank. The Resolution Foundation emphasised that by setting these red lines, the Prime Minister may be limiting the potential economic growth and living standards benefits that could have been derived from closer ties with the European Union.
Despite Sir Keir’s efforts to reset relations with the EU and move on from the strains of previous Tory-led administrations, the report suggests that significant growth dividends are being kept out of reach for the UK. The think tank pointed out that government analysis indicates rejoining the single market could potentially increase GDP by around 3.5%, compared to the current EU trade agreement in place.
The Resolution Foundation has called for a more proactive and strategic approach towards building a new “pro-growth” relationship with the EU. While acknowledging the setbacks caused by the missed opportunities of closer alignment, it also highlighted the potential substantial benefits that could still be achieved through a different approach.
The report underlined that a large portion of the economic damage expected from Brexit stems from ongoing regulatory misalignment with the EU. It noted some positive steps taken in areas such as professional qualifications and veterinary standards but stressed the necessity for a more ambitious and comprehensive strategy moving forward.
Principal economist Sophie Hale from the think tank mentioned that high-value manufacturing sectors like chemicals and vehicles, which have strong trade ties with the EU and faced challenges post-Brexit, could be a good starting point for closer alignment efforts. She emphasised that strategic prioritisation of sectors for alignment is crucial for economic growth.
This report comes shortly after Sir Keir’s visit to Brussels, where he pledged to improve relations with the EU and move past the contentious Brexit years. Although details on potential policy shifts were not disclosed, discussions around a youth mobility scheme and access to fishing waters were hinted at for future dialogues.
As both the UK government and the EU Commission agree to regular meetings to enhance bilateral relations, campaign group Best for Britain sees the need for beneficial regulatory alignment with the UK’s largest trading partner. Director of policy Tom Brufatto emphasised the importance of continuous discussions to pave the way for mutually beneficial improvements in trade and cultural ties.
The Resolution Foundation’s report serves as a reminder of the untapped economic benefits that could be realised through a more proactive and strategic approach to UK-EU relations. It underscores the need for a comprehensive strategy to address the challenges posed by Brexit and unlock the potential growth opportunities that closer alignment with the EU can bring.