The markets are always looking ahead. Sir Keir Starmer and Rachel Reeves would do well to take that on board.
Currently, we have a prime minister who likes to remind us that Liz Truss crashed the economy and when he is not doing that, together with his chancellor, tells us how they inherited a £22bn black hole from the Tories. Meanwhile, international speculators turn their noses up at Britain’s financial prospects.
This weekend will see Reeves head to Beijing to try and secure stronger trade links with China. It would be interesting to see how the Chinese react to any attempt to hark back to the past. We want their investment now, for the future; they’re not remotely interested in who said what and when. It’s over. Likewise, Reeves and Starmer will soon be off to Davos to press the global flesh and impress. Again, going over old ground will result in stifled yawns, not promises of further meetings and hard cash.
We’re no different, but we have no choice other than to sit and take it – Labour was elected with a huge majority and will be in power for years to come. The PM and his chancellor are doling out punishing fiscal measures, so they feel they have to justify it.
The fact we’ve heard it before, ad nauseam, and that it is part of why Keir and Rachel were voted into office, is neither here nor there. We’re desperate for good economic news. We wish to know what you’re going to do, not what others did before you. You say you will grow the economy and that’s what your administration is all about, but how, exactly? Stop treating us like imbeciles, end the platitudes and give it to us, chapter and verse.
In the absence of any detail, the suspicion grows there is nothing concrete, not enough to make an actual difference. That’s what the City and its legions of analysts and traders are thinking; it’s where we’re at as well, wondering if there is a plan A, let alone a plan B.
There is one historic event, however, that is worth Starmer stressing and is not being highlighted enough. One, too, that he ought to be using as a reason to drive positive change. That he isn’t speaks volumes about his natural caution as a lawyer and his unwillingness or possibly failure to show true political leadership.
This is Brexit and the harm it has done to the UK economy, which should cause Starmer to be moving heaven and earth to reconnect with the EU. Not to gain re-entry – that is not going to happen anytime soon, if at all – but to obtain a meaningful agreement on the movement of goods and people. He must not be upset about upsetting the right, reopening old wounds and galvanising Nigel Farage, Kemi Badenoch, Boris Johnson and the rest.
It has to benefit the EU. We left their club and we can’t just expect to be allowed back in, to enjoy the facilities. But with a fair wind, or rather iron will, it should happen.
Forget trying to ride two horses with China, attacking them one minute and love bombing the next. There may be a close rapport with Beijing but only until the next security crisis. Closer to home is a trading bloc we chose to lose. Donald Trump has one on his doorstep, which is why he can be so bold and brazen about tariffs. We had ours and we threw it away.
These are the numbers that Starmer and Reeves should proclaim loud and clear. As reported by The Independent, Bloomberg Economics estimates that the UK is suffering £100bn a year in lost output from leaving the EU. The Office for Budget Responsibility calculates that UK trade will sustain a 15 per cent hit in the long term from Brexit.
Sir Nick Harvey, CEO of pro-EU think tank European Movement UK, says: “Being out of the European single market has now dented the British economy by more than 5 per cent, causing an annual shortfall in Treasury finances of almost £45bn. That equates to around a third of the basic income tax yield.”
That ought to be food for thought for Reeves as she contemplates her spring statement and the possibility of yet further tax increases to cover economic stasis, if not reversal. For a country reeling from her first Budget last autumn, such a move would not only require a lot of explaining but it could amount to career suicide. Far better, surely, to push for a genuine gain for everyone.
Businesses up and down the land are suffering. Some 16,400 firms – 14 per cent of UK exporters – have stopped exporting to the EU, says the Centre for Economic Performance at LSE, due to the sheer difficulty involved. Larger companies have been able to cope but at a cost. Marks & Spencer chair Archie Norman has said the retailer has had to rent a warehouse merely to store the Brexit-generated paperwork.
Dig deeper into individual sectors and there are only stories of woe. Nobody has benefited from quitting the EU. But there’s a conspiracy of silence surrounding the issue. It’s the elephant in the room, the one that is staring us in the face, yet our leaders choose to ignore it – the Tories for obvious reasons, but Labour for fear of poking the beast. The right-wing press won’t go there and as for social media, any mention of unravelling Brexit provokes the predictable howling backlash.
Starmer must go on the front foot, recognise the mistake and urgently restore relations and repair the damage. To quote Harvey: “Our future prosperity and security demand a much slower relationship with Europe. The government’s ‘reset’ points in the right direction, but they need to go much further and much faster if we are to build a brighter future.” To borrow another phrase from someone else who holds much of the right in his thrall, it would help Make Britain Great Again.
