Britain's economy has been damaged by Brexit. But what should ministers do about it?

"Almost a decade on from the Brexit vote, the verdict is clear. Britain's immediate doomsday economic scenario might not have come to pass. But after years of political paralysis and with the eventual introduction of tougher trade barriers in 2020 trade, investment and growth in living standards have all suffered. Just as it was on the morning after the 2016 referendum, the big fight is about what the government should do in response."

"At the weekend, Wes Streeting became the latest frontbench Labour politician to call for a deeper trading relationship with the EU. His remarks were interpreted as a suggestion that Britain could join a customs union with the EU something that Keir Starmer has ruled out. As the UK's single largest trading partner, the idea has its advocates. UK exports of goods and services to the EU were worth 358bn (41% of the global total) last year."

"Under the trade and cooperation agreement negotiated by Boris Johnson's government, Britain has tariff-free trade with the EU. However, access is limited by other rules and restrictions and falls significantly short of the UK's previous membership of the EU single market and customs union. Goods exports in particular have been negatively impacted. Volumes collapsed immediately after the end of the Brexit transition period in January 2021, and remain short of 2019 levels in real terms."

Brexit introduced tougher trade barriers in 2020 that have reduced trade, investment and growth in living standards. UK exports of goods and services to the EU totaled £358bn last year, while imports were £454bn. The trade and cooperation agreement provides tariff-free trade but restricts access through rules and checks, falling short of single market and customs union membership. Goods exports collapsed after the end of the 2020 transition period and remain below 2019 real levels. Services exports fell in 2020 but have recovered more strongly. Financial services in the City of London have lost significant market access. Political debate continues over joining a customs union.

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