Chancellor Rachel Reeves has stated that the Labour government has found it is not 'dangerous' to discuss measures to mitigate the economic damage of Brexit. Speaking at a business summit in Riyadh, Saudi Arabia, Reeves said the government initially feared reopening 'that can of worms' but public response to the May trade deal with the EU was positive.
Labour had avoided discussing Brexit before the July general election, concerned about upsetting voters in the 'Red Wall' and other areas. However, after striking a new trade agreement with the EU, ministers gained confidence that voters did not see it as a betrayal. Reeves noted the deal, which included easing trade rules and a youth mobility scheme, received public support.
The Chancellor acknowledged that Brexit has increased red tape for small businesses and locked workers out of European job markets. She also linked high inflation to trade costs with the UK's nearest neighbours. However, Labour has ruled out rejoining the Customs Union, Single Market, or reintroducing free movement.
The May deal, hailed by Prime Minister Sir Keir Starmer as 'landmark', is expected to boost the UK economy by £9 billion by 2040. It includes measures such as allowing UK food exports to the EU, eGates for Brits at EU airports, and a 12-year fishing agreement. Critics, including the Conservatives and Reform UK, have called it a 'surrender'.
Reeves has blamed Brexit and the financial crash for poor UK productivity. The Office for Budget Responsibility estimates a 4% productivity hit from Brexit. Nigel Farage, a key Brexit architect, has admitted it failed but blames previous Tory governments.
