Resolution Foundation report highlights that Sir Keir Starmer’s refusal to consider rejoining the single market may cost the UK significant growth potential

Sir Keir Starmer’s ambition to reset relations with the European Union faces criticism from the Resolution Foundation, which warns that he has already limited the UK’s economic potential by ruling out a return to the single market and customs union. The Prime Minister has spoken fervently about revitalising ties with the EU after years of strained relations under successive Conservative governments, promising that enhanced collaboration will lead to increased economic growth and improved living standards. However, experts assert that his red lines may be keeping the most substantial economic benefits off the table.

The Resolution Foundation, a respected think tank, highlights that the government’s own analysis indicates that rejoining the single market could boost the UK’s GDP by approximately 3.5 per cent compared to the current trade deal with the EU. In its report, the foundation calls for a new “pro-growth” relationship with Europe, urging the government to adopt a more pragmatic and strategic approach to align more closely with the EU.

Despite these warnings, Starmer has indicated that his administration will pursue a more constructive relationship with the EU, and a reset could potentially stimulate economic growth. However, the think tank’s report stresses that mere friendly meetings and minor adjustments, such as agreements on professional qualifications and veterinary standards, are insufficient to shift the economic dial. Sophie Hale, principal economist at the Resolution Foundation, emphasised the need for a targeted strategy focused on high-value manufacturing sectors like chemicals and vehicles, which have experienced significant disruption due to Brexit.

The report comes shortly after Starmer’s visit to Brussels, where he reiterated his commitment to mending ties with the EU. He expressed a desire to leave the Brexit years behind and forge a closer relationship with the bloc. However, after talks with EU leaders, there was no indication that Starmer would relax his positions on certain contentious areas. He did mention discussions about a potential youth mobility scheme and access to British fishing waters as topics for future negotiations.

THE TELEGRAPH

The UK is at risk of mirroring the economic troubles of Europe due to a shift in policymaking strategies under Labour. Prime Minister Keir Starmer and Chancellor Rachel Reeves are adopting a top-down approach reminiscent of EU bureaucratic practices. This method prioritizes centralized control and regulation, which, while intended to streamline decision-making, may stifle innovation and responsiveness in the economy.

Reeves’ intention to attend meetings with European finance ministers indicates a desire to align closely with EU economic policies. However, this move raises concerns about the implications for UK sovereignty and economic independence. Critics argue that replicating European-style governance could lead to inefficiencies and economic stagnation, much like those experienced by several EU nations.

The article suggests that the UK is facing similar economic challenges to its European neighbours, yet the proposed solutions reflect a reliance on interventionist policies rather than fostering market-driven growth. This approach could entrench existing problems rather than alleviate them. As the government navigates its first 100 days, the emphasis on centralized control raises questions about the long-term viability of such strategies in fostering economic resilience and growth in the UK.

In essence, the article warns that Labour’s adoption of EU-style governance may lead Britain deeper into economic difficulties rather than paving a path to recovery and growth.

THE CRITIC

Catherine McBride critiques a recent paper from Aston Business School’s Centre for Business Prosperity, which claims to analyze the economic impact of the UK’s accession to the CPTPP. McBride argues that the authors—professors and researchers—lack a fundamental understanding of UK trade statistics and the complexities of international trade agreements.

The paper mistakenly suggests that the UK has experienced modest economic gains from the CPTPP, despite the agreement not yet being in force. McBride highlights the authors’ failure to grasp the nuances of the UK-EU Trade and Cooperation Agreement (TCA), which affects how certain goods are classified and reported as exports. Many products, previously counted as UK exports, are now recognized as re-exports from their countries of origin, distorting the data and leading to erroneous conclusions.

Additionally, McBride points out that changes in trade classification codes have misled the authors regarding the status of UK exports in various categories. They inaccurately report that certain exports have disappeared when, in fact, they are simply recorded differently. She also identifies mathematical errors and misinterpretations of trade data, particularly regarding UK car and electric vehicle exports to the EU.

The article critiques major media outlets like the BBC, Guardian, and Financial Times for misreporting the Aston paper’s findings to suit their narratives. McBride asserts that these misrepresentations hinder an accurate understanding of Brexit’s effects on the UK economy, underscoring the need for rigorous and informed analysis in economic discourse.