Rough-and-ready calculations based on the stated demands of the UK and EU suggest the reset might raise Britain’s GDP by 0.3-0.7 per cent.
According to the Office of Budget Responsibility (OBR), the UK’s fiscal watchdog, Brexit will reduce productivity by 4 per cent in the long run, compared to a Britain that remained in the EU. My analysis found the reduction in GDP to be around 5 per cent by the second quarter of 2022. Prime Minister Keir Starmer acknowledges that Brexit has been costly, at least in the form that the Conservative party chose. He promises to “make Brexit work” and to “tear down” the trade barriers that Brexit imposed, to offset some of those costs, while insisting Britain will not rejoin the single market, customs union or the EU itself. But how much will his planned ‘reset’ of UK-EU relations deliver on these promises?
I have conducted a rough-and-ready set of estimates of the benefits of the ‘reset’. These are based on the stated aims of both the UK and the EU so far, using assumptions and historical economic relationships that are inevitably crude guides to the future, but which offer a reasonable guide to the magnitudes involved.
In their manifesto, Labour promised to negotiate:
- a ‘veterinary agreement’, which would seek to reduce barriers to trade in food and agricultural products (which would entail alignment with EU animal and plant health rules, otherwise known as sanitary and phytosanitary rules, or SPS)
- help for performing artists to be able to conduct tours in the EU (the current visa and transport rules make touring bureaucratic and expensive)
- mutual recognition of professional qualifications, so that UK and EU professionals can more easily move across jurisdictions to work.
For its part, the European Commission published a proposal for youth mobility between the EU and the UK in April 2024. It sought negotiations to allow:
- UK and EU 18-30 year-olds to be able to migrate for work, study or other purposes for four years
- UK and EU students to pay the same tuition fees as home students in each other’s jurisdictions.
The UK has already rejected some of these negotiating demands. The British government opposes such an expansive youth mobility scheme (although not a youth mobility scheme in general, saying before the election that it merely “has no plans” for one). The EU is reportedly drawing up an alternative proposal for a slimmed down version. Other negotiating demands might be put on the table, and the UK’s unspecified plans for closer co-operation on energy might raise output. But if we take the proposals from the two sides at face value, how much might they offset the cost of Brexit?
About the author:
John Springford is an associate fellow at the Centre for European Reform.