Brexit: Lack of hope down to politicians as people wake up

These are the types of numbers that might raise hopes among those who were against leaving the EU from the start and people who now realise they were hoodwinked of a huge rowing back on the Brexit foolishness – perhaps even an eminently sensible move to rejoin the single market.

UKICE’s report this week, however, declares that any changes to the relationship between the UK and EU “are likely to be slow and incremental”.

The report examines in detail the political backdrop in the UK, and what this means for the future relationship with the EU.

UKICE, based at Kings College London, says in the report: “What is clear…is that, given the Conservatives’ electoral base, it is hard to imagine any substantive deepening of relations that go beyond the terms of the TCA (Trade and Cooperation Agreement) should the Conservatives defy the odds and form a government after the next election."

It adds: “As for Labour, Keir Starmer declared in a speech [in the] summer that the party had claimed the centre ground of British politics, which was not ‘a mushy place of compromise but a place driven by purpose’. He proceeded to outline a mushy compromise on Brexit – eschewing single market or customs union membership, arguing that nothing about revisiting those rows ‘will help stimulate growth or bring down food prices or help British businesses thrive in the modern world’.

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“Rather, his plan to ‘Make Brexit Work’ entailed ‘sorting out the Northern Ireland protocol’ – through rebuilding trust and signing a veterinary agreement for agri-products that would eliminate a large proportion of the border checks between Great Britain and Northern Ireland.”

The think-tank observes: “Beyond this, however, there was precious little of any substance. Talk of breaking down barriers to trade is all well and good, though such change would only marginally impact on the trading relationship – the Treasury’s own analysis made clear that the bulk of the economic impact of Brexit stems from the decision to leave the single market.”

UKICE adds that “steps short of” single-market membership “will have only a relatively minimal impact on trade and hence on the economic impact of Brexit on the UK”, declaring: “It is far from clear, moreover, that any proposals made by a Labour government would be acceptable to the EU. Proposals to enhance mobility or break down trade barriers will come at a price, and there is no guarantee Brussels will accept them.”

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The point about anything short of rejoining the single market having a relatively minimal impact on trade is a crucial one.

In many ways, it seems that a move to rejoin the single market should be the easiest thing in the world. The damage to the UK economy from leaving the single market is already plain to see, with much worse to come. However, such an analysis takes the politics out of the situation.

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There is no doubting the Conservatives’ intransigence on Brexit. And Sir Keir, even though he has been proved right in his warnings when he was arguing against Brexit a few years ago, appears now to have become a convert to the very cause he so opposed.

UKICE also highlights potential reluctance from Brussels. The EU, and the leaders of major member states, seemed for years to be at pains to avoid the UK taking the foolish separatist steps it has made. And you could understand why the excruciating nature of the ruling Conservatives’ approach to Brexit in the years leading up to it, which only got worse after the election of Boris Johnson, might make the EU and leaders of its member states think twice about a reunion, emotional or otherwise.

That said, actual negotiations on rejoining the single market need not be excruciating, if the will existed on both sides, given there is already a template in place in terms of countries which are members of the European Economic Area but not the EU.

And, with the UK having lost its previous privilege of having the best of both worlds by being an EU member without being under any obligation to join the euro, a return to the single market would not involve a debate over currency.

Sadly, however, the will does not appear to be there.

UKICE highlights the potential for something more positive on the UK-EU relations front, but only in time.

It says: “In the longer term, it is certainly possible that a Labour government, whilst initially cautious in attempting to move beyond the TCA, becomes bolder as the economic impact of Brexit becomes clearer and if public opinion continues to evolve as it has of late. Should the latter engender what some have called a ‘tipping point’ in attitudes, it is certainly conceivable that a Labour government would be more radical in seeking to move beyond the current limited trade deal, perhaps even considering membership of the customs union or single market.”

However, it adds: “For the time being…while the Conservative position remains as it was, caution seems the name of the game for the Opposition.”

It is worth noting here that the caution from Labour is surely on the political front.

After all, it would hardly be a cautious approach to stand by and watch Brexit cause further huge damage to the economy and living standards.

There appears to be a growing disconnect between public opinion and the stances of the leaders of the two main UK political parties on the Brexit front.

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UKICE notes: “Public opinion about Brexit seems to be shifting, not least as a result of the ongoing cost-of-living crisis. Yet politics seems far less changeable. Indeed, it is striking the degree to which the two main parties have failed to reconsider their attitudes to Brexit.”

It observes “the electorate increasingly drew a link between Brexit and their day-to-day economic circumstances”.

UKICE says: “By the end of 2022, 60% of voters said that their cost of living had increased as a result of not being a member of the European Union.”

Also noting a sharp rise in the proportion of voters believing Brexit has damaged their personal finances, UKICE adds: “This has contributed to a more negative perception of life outside the EU among the public at large, regardless of how they voted in 2016.”

It notes only 70% of 2016 Leave voters are now saying that exiting the EU was the right thing to do, compared with 88% in June 2021.

And it observes: “As analysis by UKICE has shown, a person’s view of the economic consequences of being outside the EU is the factor most likely to change their minds about how they voted in 2016. Therefore, Leave voters who believe the economy is now worse as a result of Brexit are very likely to say they would now vote to rejoin the EU. Indeed, 66% of Leavers who would now join the EU say that Brexit is responsible for weakening the UK’s economy.”

However, the dawning realisation of the reality of the situation for significant numbers of Leave voters is unlikely to change anything much in the foreseeable future, in UKICE’s view.

The think-tank says: “While domestic public opinion would indicate that there may be openness to a closer relationship with the EU on some issues, and the economic impacts of the current settlement have also become ever more clear, the possibility of radical realignment under the current framework is limited.

“Even though the TCA will be reviewed in 2025, it will not be up for full-scale renegotiation, and the desire for fundamental change appears largely absent on both sides. The EU will have little incentive to change the status quo, whereby the TCA provides for relatively open trade in goods (in which it has a surplus with the UK), but more restrictive terms on services (where it has a deficit). Meanwhile, the UK Government’s uncertain political position, the need for a general election by January 2025, as well as fluctuating public opinion do not speak in favour of a clear shift in any direction.”

This is probably a realistic enough assessment. However, it is somewhat demoralising. And it surely shows both Conservative and Labour politicians really need to raise their game, rather than sit back and watch the damage to living standards and the economy unfold.