Rachel Reeves mentioned Brexit briefly in her Budget speech.

Referring to the Conservatives, she declared: “Their Brexit deal harmed British businesses.”

It was difficult to know quite what to think about this.

At the margin, it was good to hear the Chancellor acknowledge the truth of the Brexit situation.

However, some might have drawn an inference from what she said that Labour was going to do something significant to address the damage being done by “their Brexit deal”.

It was left to the European Movement UK campaign group to underline the “devastating trade damage” from Brexit in no uncertain terms.

And, importantly, the independent Office for Budget Responsibility also highlighted again the scale of Brexit’s impact.

Labour has of course highlighted some areas in which it would like to see the UK’s post-Brexit arrangements with the European Union improved.

However, the simple fact of the matter is that the new Government’s ambitions, even if realised, would amount to mere tinkering around the edges. Some businesses and sectors might benefit from this tinkering, if progress can be made on the likes of mutual recognition of professional qualifications.

However, Labour’s red lines on Brexit, specifically its ruling out of the UK rejoining the EU or single market, mean that “their Brexit deal”, as Ms Reeves calls it, is very much here to stay.

There will be no return of frictionless trade between the UK and its biggest trading partner. And there will be no return of free movement of people between the UK and European Economic Area, something that could enhance greatly the country’s growth potential and alleviate skills and labour shortages for businesses.

It is important to realise that, while Labour might be making more positive noises about the UK’s relationship with Europe, there is nothing to suggest this will lead to anything that is going to materially alter the effect of Brexit on trade.

The OBR is absolutely sticking with its forecast of a very significant effect from Brexit.

OBR chairman Richard Hughes said in spring last year of Brexit’s effect: “We think that in the long run it reduces our overall output by around 4% compared with had we remained in the EU.”

And the OBR highlights the ongoing damage to the UK economy from Brexit in its latest economic and fiscal outlook, published on Wednesday to coincide with the Budget.

The OBR says: “The effects of subdued investment, the energy price shock, and Brexit compound the ongoing weakness seen since the financial crisis.”

It adds: “Weak growth in imports and exports over the medium term partly reflect the continuing impact of Brexit, which we expect to reduce the overall trade intensity of the UK economy by 15% in the long term.”


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Mike Galsworthy, chair of European Movement UK and founder of Scientists For EU, said in the wake of the Budget: "These latest figures from the independent OBR on UK trade are just the latest confirmation of what we already knew. Brexit does not work for working people. It can't be made to work, and can't be forced to work.

“Red tape is having a crippling impact on our economy, especially UK businesses with supply chains that depend on the EU. The Government must capitalise on their reset of our relationship with Europe and deliver long-term stability for UK businesses.”

It has indeed been frustrating to hear Prime Minister Sir Keir Starmer talk repeatedly about his ambition to “make Brexit work”, an aim which completely defies logic.

European Movement UK was formed in 1949 by Sir Winston Churchill, to prevent further conflict between European countries. It remains a cross-party organisation campaigning on the benefits of close ties between the UK and EU.

Mr Galsworthy highlighted the effect on the public finances of Brexit, as Labour delivered £40 billion a year of tax rises in the Budget.

European Movement UK put the cost for the public finances of being outside the European single market at more than £40bn a year.


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Mr Galsworthy declared: “Brexit has been the elephant in the room for far too long. It is now reckless to ignore the severe damage that continues to be done to the public finances. It has long been draining the financial and social wellbeing of every single one of us - and yet completely ignored as if it does not exist. This absurd situation has to end. We must now have a forward-facing public inquiry into the true cost of leaving the European Union and the possibilities for repairing the scandalous destruction that has been done."

Brexit certainly seems like a big enough issue to warrant a public inquiry.

European Movement UK noted that “some numbers were already very clear” before the Budget, declaring: “Brexit and the UK's status outside the single market is costing the UK economy billions of pounds every year.”

This is a simple statement of reality, albeit one that would no doubt not be accepted by the Brexiters.

Sir Nick Harvey, chief executive of European Movement UK and former armed forces minister, said: "The new Government has been quick to recognise the need to deepen the UK's cooperation with its European neighbours. Being outside the European single market is costing our economy £115bn a year and the public finances more than £40bn a year. Now the OBR predicts a 15% hit to the trade intensity of our economy.

"The Chancellor can tinker around the edges, but addressing the economic damage done by Brexit must become a priority. We need an inquiry into what our relationship with Europe could look like. Future membership of the single market and customs union must be part of that conversation.”

This would indeed be the rational course of action.

However, Labour seems to view this as an unacceptable option, in terms of political considerations, and chose to box itself in on Brexit ahead of a July 4 general election in which it appeared so keen to woo the red-wall voters who swept Boris Johnson to victory in December 2019.

Professor Molly Scott Cato, vice-president of European Movement UK, said: "How can the UK economy compete against the low costs of China, the vast subsidies of America’s inflation reduction act and the frictionless borders of the EU? We are told that Reeves’s first Budget is ‘a Budget for growth’, but how is the Chancellor of a small market outside the main trade blocs of the world going to compete and achieve that growth?

"If we seem to be caught between a rock and a hard place, I can suggest an obvious way out: becoming again part of the single market, and not just for trading purposes. Rejoining the political institutions and taking our rightful place in designing the global bloc that puts its values of environmental protection and social standards at its heart offers the best future for the UK to flourish in the future global economy."

There is indeed a huge disconnect between Labour’s focus on growth and its stance on the European single market. This is lamentable, given how hard growth is to come by and the huge boost to economic activity that would be triggered if the UK were able to rejoin the single market.

Sadly, however, this disconnect looks likely to be an enduring feature of this Labour Government.