{"id":514977,"date":"2025-10-20T17:57:10","date_gmt":"2025-10-20T17:57:10","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/514977\/"},"modified":"2025-10-20T17:57:10","modified_gmt":"2025-10-20T17:57:10","slug":"what-rachel-reeves-isnt-telling-you-when-she-blames-brexit","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/514977\/","title":{"rendered":"What Rachel Reeves isn’t telling you when she blames Brexit"},"content":{"rendered":"

Brexit has damaged our economy. There is no doubt about that. But it is only one link in a chain of events that have hurt the UK\u2019s economic growth<\/a>.<\/p>\n

The forecast from the Office for Budget Responsibility (OBR) in 2021 projected that the Brexit deal negotiated by Boris Johnson\u2019s government would leave the UK economy 4 per cent smaller in the long-term, with a 15 per cent reduction in trade, plus a hit to productivity growth. Last year, the OBR reported that its 2021 forecast was \u201cbroadly on track\u201d<\/a>, with trade down 10 per cent on 2019 levels.<\/p>\n

This week, the Chancellor Rachel Reeves has decided to make Brexit part of her explanation of why the British economy isn\u2019t doing well. It\u2019s part of a \u201cblame Brexit\u201d strategy that attempts to link Reform Party leader Nigel Farage to the economic damage too.<\/p>\n

Linking Farage directly to the UK\u2019s economic woes will damage his standing and that of his party, currently flying high in the polls. So the logic goes.<\/p>\n

This is a mistake for two reasons. Firstly, Labour MPs, including Reeves, voted for Johnson\u2019s deal to become law. They could have abstained and allowed it to pass, but for tactical reasons, felt they had to show they positively endorsed Brexit.<\/p>\n

In terms of policy, if not rhetoric now, Labour still supports that position: it has ruled out rejoining the single market or the customs union \u2013 and will therefore not make any fundamental change to the economically harmful Brexit policy they inherited.<\/p>\n

It\u2019s also not clear that the people who voted for Brexit cared much about the economic impact. The main argument in favour focused on sovereignty: \u201cTake back control\u201d. Although that slogan misdiagnosed where control had been ceded to, which brings me on to the second point.<\/p>\n

As the OBR itself states, the impact of Brexit is very hard to disentangle from other shocks: the Covid pandemic, the war in Ukraine, and now Donald Trump\u2019s trade wars. But chiefly, it also ignores that the UK economy was doing badly pre-Brexit. It was suffering from the aftermath of the 2008 banking crash and George Osborne\u2019s disastrous austerity policies, which sapped demand from the economy.<\/p>\n

The last 15 years have seen the slowest growth of any 15-year period since the end of the Second World War. The last five years (2019-2024) were the worst for UK living standards on record. The mess is deep and complex.<\/p>\n

When the global economy emerged from the pandemic it was hit with a surge in demand, which was then derailed by Russia\u2019s invasion of Ukraine in 2022. The effect of that instability on energy prices caused inflation to spike and caused incumbent governments around the world to lose popularity and in most cases to lose power too.<\/p>\n

That as much as Brexit has caused the current economic malaise, which has been further inflamed by Trump\u2019s erratic tariff policies. But how the UK Government can react to these years of permanent instability has been limited by decisions taken decades earlier \u2013 when this country really gave up control.<\/p>\n

In the 1980s and 1990s, UK governments ceded control of large parts of their power, privatising energy, water, transport, housing and more. We transferred power from the UK ballot box to boardrooms, not to Brussels.<\/p>\n

We have the most expensive energy bills in Europe, the most expensive rail fares in Europe, a worsening housing crisis, and water bills rose by 27 per cent on average this year (and were already 40 per cent higher in real terms than pre-privatisation levels<\/a>).<\/p>\n

Other countries did not take our foolhardy course. Emmanuel Macron\u2019s and Friedrich Merz\u2019s centrists in France and Germany and the social democratic government of Pedro Sanchez in Spain have all introduced price controls on energy<\/a>, transport<\/a> and housing<\/a>. In the UK, our impotent governments have none of those levers and have continued to leave it to the market.<\/p>\n

Spain\u2019s social democratic government is the only one to have survived an election. It has introduced rent controls, capped energy costs, cut public transport costs, strengthened employment rights, and introduced a wealth tax<\/a>. Last year, Spain was the fastest growing economy in the EU, and its economy minister, Carlos Cuerpo, recently boasted<\/a> that Spain is \u201cpoised to lead advanced economies in growth for a second year in a row, with the International Monetary Fund (IMF) raising our forecast to 2.9 per cent\u201d.<\/p>\n

There is a lot that the Labour Government in the UK could learn from their sister party in Spain, but chiefly it\u2019s that policies that put pounds back in ordinary people\u2019s pockets are popular. Such policies also benefit the economy by increasing consumer demand in the real economy \u2013 giving consumers more to spend in local shops, pubs and restaurants.<\/p>\n

Labour needs to be working on policy solutions, not finding someone to blame.<\/p>\n

Your next read<\/p>\n

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\t\t\t\t\"Article<\/p>\n

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