The UK's post-Brexit economic future hangs in the balance as experts warn that Labour's 'reset' deal with the EU falls woefully short on delivering substantial growth. The assessment comes as the country marks two years since the Brexit referendum, casting a spotlight on the long-term implications of the UK's relationship with Brussels.
Two recent reports have cast doubt on the agreement's ability to significantly boost the economy. The cross-party Business and Trade Committee has stated that the government's reset deal will not produce any immediate growth, despite promises from the Prime Minister. The committee criticised what it termed a 'rhetoric-reality gap', noting that even under optimistic scenarios, the current terms are projected to add only 0.5 per cent to GDP by 2040.
Liam Byrne, Chair of the BTC, has urged ministers to provide a clearer vision for Britain's relationship with Europe, pointing out that businesses require defined rules, a clear destination, and a credible strategy to foster investment, rather than relying on political signals. The committee's report highlights concerns across five key areas: a failure to deliver immediate growth, issues in defence cooperation, delayed negotiations on electricity trading, an absence of a clear strategy, and disagreements over 'dynamic alignment' with EU regulations.
The Centre for Policy Studies has also weighed in, publishing research that concludes the reset plans are 'no substitute for a credible growth strategy'. Gerard Lyons, a former contender for Governor of the Bank of England, cautions that the UK risks limiting its economic potential by not fully utilising post-Brexit regulatory and trade levers, potentially 'saddling' itself with a low-growth trading bloc whose global economic share has diminished over the past decade.
Policy Exchange's findings suggest that the reset deal concerning food standards could impose greater costs on the UK than the government's own estimated benefits. Lord Lilley, a former trade secretary, warns that businesses from fishing to pharmaceuticals could face billions of pounds in additional red tape. However, despite these challenges, over half of surveyed exporters by the British Chambers of Commerce desire closer trade agreements with the EU, citing difficulties with VAT complexity, border bureaucracy, and a lack of coordination under the existing framework.