Business leaders are urging Andy Burnham to set Britain on a path to rejoining the European Union if he becomes prime minister.
The former Greater Manchester mayor, who claimed victory in Friday’s Makerfield by-election, has spent the weekend drawing up plans for power as he positions himself to challenge Sir Keir Starmer for the keys to No 10.
With an ambitious list of promises already taking shape – from raising the income tax personal allowance threshold to a major hike in defence spending – Burnham will have to find the money to pay for it.
As Britain prepares to mark the 10th anniversary of the EU referendum on Tuesday, campaigners, economists and business leaders argue the only way to generate growth on the scale required to deliver on changes that voters want is to rejoin the bloc.
Reversing Brexit could deliver £92bn
Fresh independent research, to be published on Monday, models the key benefits of EU membership and finds the prize dwarfs every other option on the table.
The study, commissioned by campaign group Best for Britain and carried out by Frontier Economics, suggests that rebuilding Britain’s ties with Brussels – up to and including a return to membership – could deliver an economic windfall worth at least £92bn, equivalent to a growth boost of a minimum of 3.6 per cent over the next five to 10 years.
Naomi Smith, Best for Britain’s chief executive, said: “When it comes to generating growth on the vast scale required for politicians to deliver on the changes the public are crying out for, the economic heft of rejoining the EU is in a league all of its own, with no other policy lever even coming close.”
Best for Britain has long campaigned for closer ties with the EU, while Frontier Economics – a consultancy chaired by Dame Sharon White, the former chair of John Lewis – conducts independent research. The report has been backed by Paul Johnson, the respected economist and former director of the Institute for Fiscal Studies (IFS).
Any attempt to reverse Brexit would be politically toxic and risk reopening the deep divisions created by the 2016 referendum. Such a move would face a backlash from Nigel Farage’s Reform UK party and Kemi Badenoch’s Conservatives on behalf of their voters.
Although polling shows that there is support for closer ties with the EU among British voters since Brexit, the appetite for rejoining is less clear cut. There is a generational split with younger voters more likely to want to rejoin, while older voters are more likely to be against.
The report also argues that Britain would recover up to 90 per cent of Brexit’s economic hit to UK GDP – which the Office for Budget Responsibility has calculated at minus 4 per cent by 2030 – if the country were to rejoin the EU.
This would far eclipse the value of re-entering a customs union or all post-Brexit trade deals combined, the research claims.
Crucially, for a prime minister hopeful who built his name as the champion of the North, the report claims the gains would be felt most strongly in Britain’s former industrial and manufacturing heartlands in the East and West Midlands, Yorkshire and the North, due to an “outsized” boost to trade in goods.
‘No other policy lever coming close’
Brexit looks set to become an core issue in any potential leadership contest.
Former health secretary Wes Streeting – who has maintained he will be a candidate in any forthcoming contest – said last month that leaving the EU had been a “catastrophic mistake” and the UK should “one day” rejoin the bloc.
Burnham said last September that he would like to see the UK back in the EU within his lifetime.However, during the by-election campaign, he promised not to “re-run” Brexit arguments and said he was not proposing the UK rejoin the EU.
The numbers make for stark reading for the Government, which relies on a patchwork of post-Brexit trade deals. By its own estimate, every trade deal struck since leaving the EU could, combined, add around £15bn to GDP in the long run – roughly 0.5 per cent.
Membership alone, Best for Britain concludes, would deliver at least six times that over a similar time frame.
A much-trailed agri-food deal with Brussels would move the dial by just 0.2 to 0.3 per cent, the research said, while moves towards a UK-EU customs union – which would breach the red lines in the Labour Party’s last manifesto – would boost growth by just 0.5 to 0.7 per cent.
In contrast, increasing trade friction between the UK and EU economies, or even scrapping the current deal with the bloc entirely as Reform threatens to do, risks making the UK poorer. According to the report, exports could drop by as much as £16bn, while the long-run impact on growth could see a GDP hit of as much as £35bn.
Paul Johnson, formerly of the IFS, said: “A decade on from 2016’s Brexit referendum, it is clear that the UK leaving the EU has damaged our economy and left us increasingly exposed to global shocks. The people of Britain are poorer than they need have been.
“As this report shows, if we want to recover as many of those costs as possible, then we need to target not further divergence but deeper integration with our closest and biggest market.”
“The evidence is now overwhelming”, said Paul Drechsler, former chairman of the International Chambers of Commerce and former president of the Confederation of British Industry, describing a closer relationship with EU as “reducing friction, restoring competitiveness and making Britain a more attractive place in which to invest, trade and grow”.
The EU and the UK announced they will hold their next summit in Brussels to discuss a “reset” in relations on 22 July.
The summit had been delayed several times, with talks over a youth mobility scheme allowing under-30s to work, travel or study in each other’s territory deadlocked in recent weeks.
Last week, Michel Barnier, the EU’s former chief Brexit negotiator, said Britain could regain its special terms if it rejoined the bloc.
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