The Elephant in the Room: Brexit and Its Economic Implications

In a recent segment on GB News, the phrase “Elephant in the room” flashed across the screen, drawing a chuckle from my wife, Claire, who promptly shared her amusement on social media. However, the real elephant being referenced was not me, but Brexit—a topic that continues to loom large over the UK’s economic landscape. During the discussion, we delved into an article by Labour MP Stella Creasy, who chairs the Labour Movement for Europe. Her insights raised critical questions about the implications of Brexit on foreign investment and trade.

The Economic Impact of Brexit

Creasy’s article highlighted a concerning trend: foreign businesses may be hesitant to invest in a country that has distanced itself from the world’s largest trading bloc. She aptly described Brexit as “the elephant standing across our trade flows,” citing research from Aston University that revealed a nearly one-third decline in exports and imports with the EU since 2021. This downturn translates to a staggering annual loss of £183 billion for the UK economy.

Despite these alarming figures, the narrative at Keir Starmer’s recent International Investment Summit painted a different picture. The government announced a remarkable £63 billion in new business investments, which are projected to create nearly 38,000 jobs. However, the summit was not without its controversies, particularly following Transport Secretary Lou Haigh’s ill-timed call to boycott P&O, which, despite the backlash, proceeded to invest an additional £1 billion into the London Gateway port in Thurrock, Essex.

A Personal Reflection on Brexit

As a Remainer during the referendum, I have often reflected on the misleading narratives propagated by both sides of the campaign. The Project Fear campaign, led by David Cameron and George Osborne, was rife with exaggerations, while the Vote Leave campaign, spearheaded by Boris Johnson and Dominic Cummings, was equally disingenuous. For instance, the prediction of a basic rate income tax hike to 28% has not materialized; it remains at 20%. Similarly, the infamous NHS claim on the side of a campaign bus has proven to be a gross oversimplification.

My stance has remained consistent: while I believe we are better off within the EU, I do not view Brexit as an unmitigated disaster. The reality is that we are somewhat worse off economically, but with the myriad challenges facing Britain today, the specific impacts of Brexit often go unnoticed. For instance, food prices have surged by 25% over the past five years, but it is worth noting that a significant portion of this increase would have occurred regardless of our EU membership.

Sovereignty vs. Economic Cost

For those who voted for UK sovereignty—echoing Cummings’ rallying cry of “taking back control”—the reality is that they have indeed achieved their goal. However, this sovereignty comes with an economic cost that must be weighed carefully. The decision to leave the EU was always going to entail trade-offs, and the question remains whether the benefits of sovereignty justify the economic repercussions.

Stella Creasy and I share the understanding that rejoining the EU is not a feasible option, as it would introduce long-term uncertainty. Instead, we must focus on making Brexit work. I welcome Starmer’s approach to fostering closer ties with the EU without rejoining it. Aligning regulations on food safety, animal welfare, and plant health could facilitate smoother trade and movement through our ports.

The Need for Mobility Schemes

One area where the government has been overly cautious is in the realm of youth mobility. Prime Minister Rishi Sunak was quick to dismiss the idea of a youth mobility scheme that would allow young Brits to live and work in Europe for two years, fearing backlash from Brexiteers concerned about a return to free movement. However, such schemes are already functioning effectively with several countries, including Commonwealth nations and others like South Korea and Japan.

Thanks to the Windsor Framework negotiated by Sunak, trade between Northern Ireland and the rest of the UK has improved, with products like sausages now flowing freely across the Irish Sea. This agreement has alleviated some of the logistical headaches that Brexit introduced, allowing for a more seamless exchange of goods.

The ECHR and Northern Ireland

As the political landscape evolves, discussions surrounding the European Convention on Human Rights (ECHR) have emerged, particularly among Tory leadership contenders Robert Jenrick and Kemi Badenoch. Both have suggested renegotiating or even leaving the ECHR, which is intricately linked to the Good Friday Agreement. However, the implications of such a move could be profound, as we cannot selectively apply ECHR oversight across the UK.

The silence from Jenrick and Badenoch regarding how they plan to navigate these complexities is another “elephant in the room.” Article 1 of the ECHR mandates that parties must secure the rights and freedoms defined within the convention for everyone under their jurisdiction. Ignoring this could jeopardize the delicate balance established in Northern Ireland.

Conclusion: Navigating the Future

As we move forward, it is crucial to address the elephants in the room—both Brexit and the ECHR—head-on. The path ahead requires a nuanced understanding of the economic realities and political implications of our choices. While the challenges are significant, there is also an opportunity to forge a new relationship with the EU that respects our sovereignty while fostering economic growth. The key lies in collaboration, pragmatism, and a willingness to adapt to the evolving landscape of international trade and relations.