Kerry Postlewhite says polls show strong majority for closer union with Europe, but it’s urgent to fix the plumbing to meet key Labour goals
Brexit was never going to deliver the instant prosperity promised by Vote Leave, nor did it unleash the immediate economic storm some opponents predicted. Instead, the real damage has come from something less dramatic but more corrosive –a steady, persistent leak in the UK’s economic plumbing. Not enough to cause sudden collapse, but enough to seep into the foundations year after year. The cumulative drip of structural damage – lost frictionless trade, reduced investment, prolonged uncertainty – has steadily weakened our economy, leaving the government trying to turn on the taps of growth while the pipes beneath it continue to crumble.
The scale of that damage is now glaringly obvious. Recent studies converge on a long-term GDP loss of 4-8%, alongside a 10-15% decline in business investment and a structural weakening of trade intensity. These are not abstract figures – they translate into weaker productivity, squeezed public services and widening regional disparities. The most recent calculations of the hit to GDP attributable to Brexit are far higher than the “Project Fear” projections during the referendum campaign. A new report from the House of Commons Library estimates that Brexit is costing the Treasury up to £90 billion a year in lost tax revenue – in “side of a bus” terms, that’s £250 million a day.
Practically, Brexit has become one of the central explanations for why Britain is stuck and why living standards have flatlined. The Conservative-negotiated Trade and Cooperation Agreement delivered a symbolic sovereignty, but one that bears little relation to the realities of how people earn, trade and live.
Labour’s silence on Brexit during the 2024 campaign was arguably understandable; the election was fought on trust, competence and public services, not trade law. But governing requires more than tactical discretion. If Labour genuinely intends to deliver the strongest growth in the G7, it must confront the fact that the current post-Brexit settlement is incompatible with that ambition. Sadly, the Chancellor was silent on Brexit in November’s Budget Statement.
To be fair, the government is taking positive steps to repair relations with the EU. Scientific collaboration has been deepened, security cooperation strengthened, some friction on plant and animal products is being eased, youth mobility and artist touring are on the agenda and regulatory dialogues reopened. These measures are necessary and overdue, but far from sufficient. They address symptoms, not the underlying condition. A recent analysis by John Springford for the Centre for European Reform calculates that these changes would improve UK GDP by 0.3 to 0.7% over 10 years.
A progressive case for rejoining the single market and customs union rests on four connected pillars: growth as the foundation of social and environmental justice; regional fairness; standards and workers’ rights; and internationalism.
First, growth is the foundation of social and environmental justice. Brexit, lower trade and reduced investment depress productivity, which, in turn, permanently constrains the resources available for public services, social investment and the green transition. Re-entering the single market and customs union is not a constitutional indulgence; it is a prerequisite for funding the priorities Labour claims to champion. Without it, the path to modern, well-resourced public services and affordability becomes even harder. Simply repeating the growth mantra, whilst not getting closer and closer to the customs union and single market, will not make it happen and leaves the government fishing in dangerous ponds – deregulation, for example.
Second, regional fairness. The economic hit has not been evenly distributed. Manufacturing regions, farming communities, smaller exporters and areas outside the South East have borne the brunt, while larger firms and financial centres adapt more easily. Rejoining would reconnect Britain’s nations and regions to our natural markets. A left government cannot accept a settlement that entrenches regional inequality.
Third, standards and workers’ rights.Reintegrating with the single market would anchor Britain to high labour, consumer, environmental and digital standards, strengthening progressive protections rather than weakening them, even if those EU protections are threatened by the European far-right.
Fourthly, internationalism. For a Labour government committed to decent work and social and environmental justice, security, international development and fair migration, European cooperation is an asset, not a threat. Being closely linked to the EU strengthens our ability to defend our interests and be less vulnerable to the whims of Trump and Putin.
There are immediate, tangible benefits. Frictionless supply chains would revive small exporters and lower food prices. Participation in joint research, industrial and defence programmes would deliver better jobs.
If Labour is serious about growth, affordability, restoring public services, rebuilding the regions, strengthening defence and delivering a just energy transition, it cannot treat the Trade and Co-operation Agreement as untouchable. The Government’s initial steps towards increased cooperation are very welcome, but they cannot be the endpoint. A decade of damage will not be repaired by timidity. Rejoining the EU single market and customs union is not merely desirable, it is essential. The pipes are still leaking, and it is time to fix them properly.