Re-entering a customs union – a transfer now brazenly supported by senior Labour figures – would shave 0.5 % off GDP within the first yr, the assume tank claims.
Chancellor of the Exchequer Rachel Reeves throughout a go to to the OpenReach coaching centre in Crawley (Picture: PA)
Rachel Reeves’s insistence that nearer ties with the European Union symbolize Britain’s “greatest prize” is an outright Brexit betrayal that may price the UK economic system as much as £40 billion a yr, a number one assume tank has warned. The Prosperity Institute mentioned Sir Keir Starmer’s accelerating pivot in the direction of Brussels is “fatally flawed” and can inflict lasting injury on development, commerce and sovereignty.
Re-entering a customs union — a transfer now brazenly supported by some senior Labour figures, together with David Lammy and Wes Streeting — would shave 0.5% off GDP within the first yr, rising to a 1.35 % collapse by yr 5, the equal of £30-40bn in misplaced output yearly, says the Institute. Economist Fred de Fossard mentioned: “British companies have thrived since leaving the EU. Whereas some individuals say decrease commerce limitations with Europe make rejoining worthwhile, the information would not bear this out.
Sir Keir Starmer on the Munich Safety Convention (Picture: Getty)
“The EU economic system is in decline, demand for items is way decrease than previously, its industrial base is being eroded and the bloc just isn’t the financial powerhouse it as soon as was.
“British companies could be locked into that decline and shackled to a captive market. That is what the EU needs and we shouldn’t give it to them.”
The Institute’s report warns that deeper alignment would increase commerce limitations with faster-growing markets within the US and Indo-Pacific, erode Britain’s impartial commerce coverage (which has already secured over 70 offers value £164bn) and expose the UK to increased regulatory prices.
Alignment would drive up AI prices by imposing a 57.5 % enhance in carbon fees on information centres, reported The Telegraph.
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Starmer: ‘We’re not the Britain of the Brexit years anymore.’
It will additionally danger frightening Donald Trump and torpedoing a commerce cope with the world’s largest economic system. The US president has repeatedly attacked the EU’s sluggish development and purple tape.
Britain has already paid a heavy value for the “reset” deal struck final yr. In change for aligning with EU plant and animal well being guidelines, the UK surrendered 12 years’ entry to its fishing waters.
Farmers warn the adjustments will wreak havoc on agriculture, imposing harsher requirements on British meals manufacturing. Dozens of pesticides and herbicides permitted within the UK are banned in Europe.
Labour’s determination to rejoin the Erasmus Plus programme has additionally come underneath hearth. The Institute mentioned: “It will power Britain to subject visas to tens of hundreds of EU residents and spend taxpayer cash subsidising European universities with little profit to taxpayers, college students, or researchers.”
The findings expose the gulf between Labour’s rhetoric and its actions. The 2024 manifesto dominated out rejoining the customs union. In December, Sir Keir insisted: “It isn’t at the moment our coverage.”
Nevertheless, simply weeks later he steered higher alignment, whereas 13 Labour MPs backed a Liberal Democrat invoice to start negotiations on a bespoke customs union.
A Authorities spokesman mentioned: “We’re centered on delivering offers that would add as much as £9bn a yr to the UK economic system, supporting producers and companies, backing jobs, and placing extra money in individuals’s pockets throughout the whole nation.
“Our new strategic partnership with the EU is in our nationwide curiosity. It’s good for payments, good for our borders, and good for jobs, with out compromising on our purple traces – no return to the customs union, no return to freedom of motion, and no rejoining the one market.”
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