Labour’s EU policy will do little to address economic impact of Brexit, says thinktank

Labour’s EU policy amounts to “tinkering around the edges of the current relationship” and will do little to “address the continuing economic impacts of Brexit”, a report has concluded.

An audit of UK-EU relations by the thinktank UK in a Changing Europe concluded that Labour had ruled out changes that would have made the biggest impact on economic growth.

Labour has proposed a series of technical changes to the UK-EU trade deal to reduce red tape, including agreements on mobility, veterinary standards and security cooperation.

Rachel Reeves, the shadow chancellor, told the Financial Times on Monday that Labour would “look to improve our trading relationship with Europe” and that no one voted for Brexit because “they were not happy that chemicals regulations were the same across Europe”.

In its manifesto Labour has prioritised economic growth and wealth creation, and hopes a better relationship with Europe will contribute to that.

But the report argues that without the UK rejoining the single market or customs union – both of which Labour has ruled out – more limited agreements would be unlikely to have much impact on the UK’s economic growth.

“With economic growth a priority, the most obvious source of such growth will have been ruled out in the manifesto,” it says. “For the moment, Starmer and his team seem content to talk in terms of tinkering around the edges of the current relationship.

“Any gains from technical improvements will be relatively minimal: useful in reducing trade frictions, but not enough to really address the continuing economic impacts of Brexit.”

The report, UK-EU Relations 2024, warns that the EU may not be very receptive to Labour’s proposals, because UK relations are no longer a priority for the bloc. It argues that a Labour government would need to incentivise Brussels to negotiate by offering something it wants, such as a mobility agreement.

The report says Labour will also have to accept a degree of alignment with EU rules and oversight from the European court of justice if it is to secure its more ambitious proposals, such as a veterinary agreement.

It suggests that a Labour government would “countenance some limited forms of regulatory alignment with the EU – breaking a great Brexit taboo by trading off a degree of sovereignty in exchange for improved trading relations”.

The party has also indicated that if it wins, it would seek to regularly attend meetings of the EU foreign affairs council.

Joël Reland, a senior researcher at the thinktank, said: “Labour has maintained a studied silence on Brexit in this election campaign, but if elected it will have to face up to some hard choices. Avoiding deals which involve alignment with the EU rules is the politically safer option, but this could well undermine its attempts to boost economic growth.”

Relations between the UK and EU have improved during Rishi Sunak’s premiership thanks to the Windsor framework agreement on the post-Brexit trade rules in Northern Ireland, but political dialogue remains limited.

David Frost, the lead Brexit negotiator under Boris Johnson’s government, who is now a Tory peer, rejected Reeves’s argument that no one voted for Brexit because of chemicals regulations. He wrote on X: “Except for free movement, people didn’t vote against any single subset of single market rules – they voted against having the rules set in Brussels.”

A European Commission spokesperson declined to comment on the specifics of Reeves’s interview.


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