Rishi Sunak is in denial – proof that Brexit has failed mounts by the day

This week, all hopes of a US-UK trade deal were abandoned. President Biden’s administration signalled a deal is off, owing to fears that it could hit American jobs. Next month, food imports from the EU will be subject to cumbersome new UK border checks. It is the latest evidence that Brexit appears to be making it harder for Britain’s economy and people to thrive, not easier, as we were led to believe, writes Dominic Grieve

Wednesday 20 December 2023 13:12 GMT
Sunak welcomes Joe Biden to Downing Street in July
Sunak welcomes Joe Biden to Downing Street in July (AP)

Bad news, when expected, is often managed by trying to pretend it does not exist. So, it was on Monday, as the final nail was driven into the coffin of the promised US-UK trade agreement when Joe Biden signalled his administration had no interest in agreeing one.

Rather than face up to its implications, a UK government spokesperson tried to argue that the US and the UK were going to develop other forms of trade cooperation. Displacement activity cannot, however, conceal how this news announces the total failure of the central plank of the post-Brexit trade policy promoted by those who supported leaving the EU.

We were assured that a buccaneering and independent UK would thrive on new free trade deals that carried none of the regulatory baggage of the EU single market. And of these deals, none was more important than that with the US, our largest single-state trading partner.

Furthermore, the failure to agree on one comes at the end of a series of other failures in this area.

There is no trade deal with India either, and the one with Australia has been candidly described by one government minister as of questionable benefit to us. The trans-Pacific partnership is likely to be of minimal value in boosting our GDP, and most of the other deals are a salvage operation to hang on to existing trade deals we already enjoyed through membership of the EU.

Meanwhile, the drawbacks of leaving the single market of the EU are all too obvious. Obstacles to trade with our closest neighbours have imposed red tape and costs that have hit many businesses and left the UK economy an estimated 3-5 per cent poorer than if we had stayed in, depriving the exchequer of up to £40bn of tax revenue at a time when our key public services are near collapse from lack of funding.

However, the extent of the failure does not need statistics. The decision of the government to tolerate, indeed promote, a one-sided arrangement by which we have costly border checks imposed on food exports but have chosen to postpone until late 2024 the introduction of our own checks on produce from the EU – which supplies 28 per cent of our food – because it will increase fuel-price inflation speaks for itself.

Vassalage, indeed – to use a phrase once beloved of hard Brexiteers. I note that an LSE study estimates that since Brexit kicked in properly, post-transition, it has added nearly £7bn to our national grocery bill.

Attempts are made to maintain that the UK economy is at least performing as well, if not better, than that of many of our EU neighbours. Countries in the EU are certainly not immune from current economic problems at present, often facing sluggish or near non-existent growth. But that is to miss the extent to which Brexit has added to our longer-term poor economic performance.

In 2008, UK household incomes were an average of £500 per annum lower than for a German in an equivalent job. Today, the gap is £4,000. Linked to this is that we have had for many years the lowest rates of business investment as a percentage of GDP of any country in the Organisation for Economic Cooperation and Development and G7 – around 16 per cent, compared to well over 20 per cent in France. Just before the 2016 referendum, it looked as if we had turned this round. Since then, it has all got much worse.

Economic growth is, of course, not everything. Human wellbeing is not measured solely by it. But politics, both as science, art or calling, ought to be about trying to provide the citizens of our country with an economic and political environment and institutions that can frame their lives and help individuals achieve their full potential, able to benefit themselves, their families and build in the process societal and business relationships that further our common good and cascade it down the generations. It is obvious to almost everyone at present that this is not happening. It is hardly surprising, therefore, that the electorate is deeply discontented and has lost faith in politicians.

One might have thought that, in the circumstances, the focus of our politics would be how to get ourselves out of this mess. But, remarkably, the mainstream of the government – and the Labour opposition, and even the Liberal Democrats – are silent on the issue.

Labour talks of “making Brexit work” and “securing the highest sustained growth in the G7”. But this shies away from the fact that, as a country, particularly dependent on maximising frictionless trade links in both goods and services to be profitable and grow businesses, we have hobbled ourselves by creating barriers with our closest trading partners at a time when global trade is becoming much more protectionist, as the death of the UK-US trade deal attests.

How we break down those barriers and provide an environment that incentivises growth and investment is the elephant in the room. There will, of course, be other economic reforms that might be beneficial, as one can certainly make an argument that EU membership cushioned us from our structural economic weaknesses. But until we openly accept that Brexit has been a serious error and has caused us nothing but damage, the solutions are likely to continue to elude us.

Dominic Grieve KC was attorney general between 2010 and 2014

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