Is rejoining the EU the answer to the UK's financial woes?

Added: 2026-05-17

[00:00:00]Wesstreeting says the UK should rejoin the European Union that Brexit's been a catastrophic mistake and rejoining will rebuild our economy and trade. It's a political pitch based on an economic assumption that things can only get better if we rejoin, but absent a time machine, it might not be that straightforward. First question, have things got worse? The answer by most economic consensus is yes. Since the Brexit vote, there've been various independent assessments, all of them showing a negative impact on GDP. The OBR said productivity would decline by 4% by 2035. The Organization for Economic Cooperation and Development said GDP would decline 5% by 2030. And the US National Bureau of Economic Research by 6 to 8% by last year. How do things actually look today? Well, relatively good if you only look at the most recent data. GDP for the first quarter of this year makes the UK the fastest growing economy in the G7. Some Brexiteers have claimed this as proof that the doom-mongering was, well, just that. Now, take the timeline back a little though to pre-pandemic and you see UK GDP has underperformed the Eurozone. Now, disentangling Brexit from the massive economic shocks that followed the pandemic, the Ukraine war, now Iran, is hard. Would the UK have been immune had we still been in the EU?

[00:01:18]Well, no. But were we more exposed because we chose to make a fundamental change to our most important economic relationship just before these generational challenges hit? Well, yes.

[00:01:29]Now, the EU was and remains our largest single trading partner, 41% of exports last year. That share has declined a bit. Now, the US is our largest single country trading partner at 22%. Then comes China at 3% and then scores of smaller relationships that make up the other third of trade. Now, one of the claimed benefits of Brexit was the freedom to do trade deals with these countries and there have been some with Australia, New Zealand, and Japan, each worth less than 0.1% of GDP, though. And India, a little more than that. Now, every little helps, but none of those are game-changing. The great prize for leavers was a trade deal with the US, but that hasn't happened. And since Donald Trump's second term, barriers have gone up, not come down. Last year, Keir Starmer did do a narrow deal on beef, ethanol, steel, cars, and pharmaceuticals, but it's not legally binding, and it's subject to presidential whim. The Prime Minister does now want to move closer to the EU.

[00:02:23]The King's Speech includes a bill to increase food and drink trade by removing checks and accepting EU standards. Now, immigration loomed large in the Brexit debate a decade ago with promises it would decline. This is what actually happened. EU migration, the red line here, did go down, but non-EU numbers soared. A huge wave of legal migration now in decline, but it's an even bigger political issue now than it was then. It's highly unlikely the EU would hand back the same favorable terms on which we left, and freedom of movement is likely to be non- negotiable. The success or failure of Brexit was always going to be about what governments chose to do with it, and the same is likely to apply to rejoining.

[00:03:04]Now, one final chart that might explain why Wes Streeting is raising the specter of Europe. Now, polling shows that nearly 60% of people think leaving was a mistake.

[00:03:14]Though, tellingly, Andy Burnham is not supporting a return as he fights a by-election in a leave-voting seat. What appetite there is to reopen the Brexit debate in the country beyond the Labour leadership campaign, well, that's another question entirely.