Starmer warned just ‘tinkering’ with EU Brexit deal will not save UK economy

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Sir Keir Starmer has been warned that “tinkering” with Britain’s EU deal will not rescue the economy and bring about the increase in growth or productivity his government has aimed to achieve.

The warning from the independent all-party pressure group European Movement has come with a shopping list of things the new Labour government needs to achieve in order to restore confidence in Britain as a safe place to invest.

It follows a devastating report by economic think tank the National Institute of Economic and Social Research (NIESR) which showed that “Brexit uncertainty” has harmed external investment in the UK, damaged productivity – particularly in regions like the Midlands which voted for Leave – and held the UK back from recovering from the pandemic compared to other Western countries.

Responding to the report, Richard Kilpatrick, campaign manager of the European Movement UK said: “To grow the economy and invest in our public sector, to build the hospitals and schools that our communities need, we need to accept that Brexit has failed to deliver in every area.

“The European Movement welcomes the work of NIESR, which confirms that our hard separation from the EU is now seriously holding our country back. We deserve better.”

He warned: “Tinkering around the edges of a broken Brexit deal won’t deliver the long-term certainty that our economy needs. We urge the prime minister to agree to our call for an independent, forward-looking inquiry into the ongoing costs of Brexit on our economy, and what the future for the UK would be with membership of the single market and customs union on the table.”

The intervention comes as the government has already prepared the way for a renegotiation of Boris Johnson’s flawed Brexit deal with the EU.

The talks are being spearheaded by European affairs minister Nick Thomas-Symonds. He began his work at the Nato conference in Washington DC in the first week of the Labour government and then played a major role in the European Political Community (EPC) summit the following week at Blenheim Palace.

Sir Keir has disappointed many by saying there will be no attempt to rejoin the EU or its single market and customs union – even though the entry of any of those things would ease trade with the UK’s biggest trading partner and restore credibility in the UK as a place to invest.

But the European Movement, which includes experts in several fields, has already laid out ideas for what the government needs to do to restore Britain’s credibility economically. This includes:

Summarising the need for changes in the report this week, Stephen Millard, deputy director for macroeconomic modelling and forecasting at NIESR, said: “If the renegotiation goes in the direction of making it easier to trade compared to where we are now – if the renegotiation manages to achieve that, then that will be a positive for sure.

“By opening up trade more that does lead to productivity growth, it also again if we are trading more with the EU it makes us a better – more attractive – place for direct foreign investment, it makes the UK a more attractive place for business globally because we have those opportunities to trade.

“That has been the really bad thing about Brexit, is that it has reduced the opportunities of businesses to grow by trade and be more productive.

“So if there is one thing the government could do that would have a serious impact on growth then trying to bring us closer to Europe would be a definite winner in my view.”