‘The reset with the EU must be ambitious if we are to meet our economic, security and other objectives’

The UK-EU summit in London on 19 May will at last give us an indication of how ambitious the Labour government’s reset with the European Union actually is. However, early signs and mood music seem to indicate that it will be extremely cautious. While it will probably include an important security agreement and some practical improvements on things such as sanitary rules for agricultural products, it will fall short of anything that really changes the dial economically.

In a context where the dire state of public finances and the poor prospects for economic growth are holding Britain back, such caution is unwise. We are in the midst of bitter arguments about whether we can afford to spend an extra £3billion here, or save another £1billion there. Yet the lost tax revenue to the exchequer arising from Brexit (mostly from being outside the single market and customs union) is, according to OBR figures, £40 billion every year.

This is because, outside the customs union, even with zero tariffs, goods crossing the border are, under WTO rules, subject to checks on their origin (are they really British and eligible for tariff-free entry, or are they or their main components in fact from somewhere else?), and outside the single market (an area where common standards of consumer protection, workers’ rights, environmental protections and fair competition rules have been painstakingly agreed) further checks on whether they comply with these rules. 

Without rejoining the customs union and following single market standards, we will continue to be burdened by unnecessary extra costs in all our trade with what is, by far, our most important trading partner. And, with world trade severely disrupted by Trump, Britain, as a trading nation, has a vital choice to make about its priority trading partners: the EU, where agreements are made, kept, reciprocal, based on international norms, with disputes settled by a court,  or the USA, where agreements are made, broken, changed and broken again at a whim, without any recourse when the law is ignored.

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Why the caution?

In the election campaign, Labour nervously pledged not only not to rejoin the European Union, but also not even to rejoin the single market or the customs union. A pledge that has made it difficult to achieve other pledges – not least the those to rekindle economic growth and thereby finance investment and public services.

What seems to hold the government back is a belief that full participation in the single market would require a full restoration of freedom of movement, seen as an insurmountable obstacle, given the public concerns about record levels of migration to Britain. 

But in fact, most migration to Britain is from outside the EU, which is (and was, even when we were a member of the EU) a matter for national regulation. It is for Britain to decide how open or restrictive it wants to be. 

Migration from the EU was always a smaller number and is now considerably so. And here, we are talking about a reciprocal right, with millions of Brits living in other EU countries (indeed Brits were the EU’s biggest beneficiaries of the right to settle anywhere in the EU, with more British people living in other EU countries than any other nationality).

But, crucially, it was not an unconditional right: those exercising it had to find work or be self-sufficient, conditions which Britain failed to enforce at the time, but could if free movement (perhaps referred to as “conditional free movement” to emphasise this point) were to be restored. Nor was EU freedom of movement a cost to the exchequer, as EU citizens in Britain paid one third in more in taxes than they received in benefits and services combined. In short, EU freedom of movement was not really the problem it was made out to be.

In any case, far from enabling Britain to “take back control” of its borders, Brexit has removed key tools for controlling that border. When we were in the EU, Britain could use the internal EU agreement that asylum-seekers should be processed by the EU country in which they first arrived. Britain used it to send thousands of asylum-seekers back to the EU country they first arrived in — something it can no longer do. Britain was also able to participate fully in the EU’s system of cooperation among police and intelligence forces. It could, when needed, get information on people when they arrived at the border, from checking any available criminal records to verifying fingerprints. It also meant cooperating to fight international gangs of people traffickers. Brexit was shooting ourselves in the foot in terms of “taking back control” of our borders.

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Lagging behind public opinion?

If economic reality forces the Labour government to go further, and to at least rejoin the single market and the customs union, and even if that were to include conditional free movement with EU countries, it will find that this does not throw up as many problems as it fears. It may even be popular. Many businesses, universities, artists, and others want it. Above all, if the tracker opinion polls show that public opinion continues its gradual but relentless shift in favour of rejoining the EU, then surely these smaller steps, at least, should be easier.

Especially if those smaller steps enable us to achieve our other objectives, not least on economic growth, security and migration. We should recognize that appeasing the populists means limiting our ability to do the very thing that will limit their appeal. 

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