Being right that Brexit was a bad idea is no substitute for knowing what to do next. Our chance of salvaging something from the mess it created is being undermined by those selling false hope – either that Brexit can work, or that it can be easily undone. For the 16,000 businesses that have now given up trading with Europe because of paperwork, prospects remain bleak unless the government stops offering a sticking plaster and starts major surgery on our future with Europe.
Forgive pro-Europeans for thinking the momentum is now with us. Labour has been slow to say what it wants from the EU reset, and slower still to acknowledge the inevitable tradeoffs required. Until the summer, ministers promised to “make Brexit work” and endlessly repeated “red lines”. Yet in recent weeks, a major study has found that leaving the EU cost the UK 6-8% of GDP per capita; now the chancellor calls the damage of Brexit “severe and long lasting”; the prime minister condemns the “wild promises” of the Leave campaign. Belatedly, a window of opportunity to change course may be opening.
History shows that simply saying we want something from Europe doesn’t make it happen. The UK can be its own worst enemy – acting as if the challenge is in us deciding our objectives and the easy part is Europe agreeing. For the 27 other nations that are also part of this relationship, Britain’s confidence about who sets the agenda – from supporters and opponents of Brexit alike – is baffling.
Anyone pro-European should resist talk of rejoining – not because Brexit was a good idea, but because to rejoin is, right now, an impossibility. Having dealt with our drama following the 2016 vote, asking the EU to indulge another referendum is like asking your neighbour to trust your next house party won’t result in more insurance claims. Even if the EU agreed to a rejoin process, it would take several years to decide the terms. Any other improvements to how we trade would be put on ice. For businesses desperate for respite, pursuing rejoin now would condemn them to another decade of struggling with paperwork mountains, with no guarantee a better deal will be secured.
Those claiming we could “just” rejoin the customs union or single market are little better at reading the mood of our neighbours. There’s no denying either would reduce the regulatory obstacles that have seen our goods exports to the EU fall by a fifth. But a customs union is an option not just with known drawbacks, such as giving up independent trade deals, but also outcomes we can’t predict, such as the EU’s new asking price on currency issues and movement of people. Rejoining the single market would mean taking on the anti-freedom of movement brigade and, given Britain’s divergence from the EU since Brexit, would be more complicated than many are willing to acknowledge.
None of this is a reason not to aim high. Those independent trade deals are dwarfed by the effects of leaving the single market: the recent deal with India is predicted to add just 0.13% per year to GDP. Europe can be more flexible than is often claimed – the Swiss aren’t part of a customs union but face far fewer barriers. But no option comes without costs, and the UK needs to be explicit in explaining why they are worth it. A customs union alone should not become our goal simply because it is seen as the least politically painful.
Europe is perfectly capable of putting games before gains, too. Talks over UK participation in the EU’s €150bn Security Action for Europe (Safe) fund stalled when the commission demanded an exorbitant entry fee to show Brexit doesn’t bring benefits. Similar attempts to squeeze the UK can already be seen in proposed terms for the promised deals on food and animals – the sanitary and phytosanitary (SPS) agreement and emissions trading. Any hasty demands that make it look as if the UK thinks it deserves special treatment are likely to be knocked back.
1. Measure the impact
So how can Labour square this circle? First, the government should commission a Brexit impact analysis, chaired by external experts, similar to the strategic defence review. Previous governments stuck to the fantasy that Brexit could work; this government spent too long being shy to say it isn’t. At the budget, the Office for Budget Responsibility (OBR) declined to provide further evidence on the economic effects of Brexit. That means, astonishingly, we still have no uncontested figures on the biggest single factor affecting growth.
An impact analysis would put to bed that debate and those who still preach Brexit benefits. It could also provide data to judge all future options, from the existing deal, to sector-specific deals on market access to – yes, membership of the customs union and the single market.
2. Put everything on the table
Second, the government should approach next year’s negotiations with Europe clear that it is looking for a deal offering “more for more”, with everything up for discussion – not just because we want better trade but because, in a world shaped by Donald Trump, Vladimir Putin and Xi Jinping, Britain and Europe need each other more than ever. Geopolitical turmoil and the rise of far-right populists means that everything each side cares about should be on the table if the return is to be worth it.
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Rather than obsessing about caps on numbers for youth mobility, we should prioritise a scheme based on purpose of visit and control of all movement across our borders. Financial contributions to EU budgets must not be taboo if they bring net gain for the UK. Regulatory alignment is what UK businesses enmeshed in global supply chains prefer. Forget red lines – the Trump administration’s anti-European national security strategy, and its threatened Nato withdrawal, should mean red alert.
3. Trust parliament
Third, parliament should be brought into the discussion. Our future with Europe is yet to be debated formally under this government at all, let alone the possibilities of a revised deal. Brexiters and the “just rejoin” camp hide behind this lack of scrutiny to make their fantasies seem plausible. The government should not be frightened to take on either side, using the evidence in the review to show the impact of Brexit and what a new deal would deliver. Labour must confront those blocking the tradeoffs that would help British businesses by saying now they will put a mandate for that new relationship in the next manifesto.
Nearly two-thirds of the public now see Brexit as more of a failure than a success. But the obvious reason to overhaul our offer to Europe is that sticking with our current plans is irresponsible. This government inherited a growth emergency that is putting brutal pressure on public services and on people’s lives. Others profess simple answers for electoral gain. The right answers on Europe are not easy, nor quick – but they do exist. It’s not too late for Labour to make them.
