We must stop tiptoeing around the EU and jump back in

Bitter experience suggests that governments are better at impeding economic growth than accelerating it.

Margaret Thatcher is worshipped in certain quarters but her first government of 1979-83 oversaw a serious recession and a rise in unemployment to more than 3 million, while her hollowing out of manufacturing continues to have damaging effects to this day (her cabinet members said “our future lies in services”). The austerity policy pursued by the coalition government between 2010 and 2015 was the last thing needed after the devastation wreaked by the 2008 banking crisis.

All the same, there was so much hope when Labour was elected in 2024. But many of the actions taken last year by the chancellor, Rachel Reeves, are generally considered to have impeded the growth objectives in which she placed so much store.

Meanwhile, the damage caused by David Cameron’s decision to call the 2016 referendum is still with us and mounting. The government’s tone towards Europe has markedly shifted in the past month or so. Reeves recently acknowledged the research findings by Stanford University and others that Brexit could have knocked as much as 8% off the UK’s annual gross domestic product, with all that implies for tax revenue and the financing of public services. She’s all but said that Brexit was a disaster.

As if the above were not enough, we now have the worldwide disruption to trade and growth caused by the closure of the Strait of Hormuz. This surely was not the intention of the US and Israeli administrations. As one seasoned British politician put it to me, “until recently Trump probably thought the Strait of Hormuz was a Chicago nightclub”.

Despite his well-publicised local difficulties, the prime minister has been impressively active on the world stage, not least in standing up to Trump. And with regard to the European Union, the various laudable attempts at resetting our trading relationship are officially estimated to restore some 0.3% of that lost GDP. Further efforts to align regulations in key sectors could produce even bigger benefits.

The fact of the matter is that this is a start, but not enough. We must do more than play “grandmother’s footsteps” with the EU. Starmer and Reeves must reconsider their so-called “red lines” around rejoining the European single market and customs union – and rejoining the EU itself. Half measures won’t do. We have to go for it.

It is quite clear from recent opinion polls that the majority of this country thinks Brexit was a mistake. Obviously, Reform UK are a threat to aspirations of rejoining the EU but, in a previous guise, they had their way with Brexit and it proved a disaster. The EU might make demands that we don’t initially like the look of, but it would be a price worth paying. Trump, with his belligerence, has brought it home to this country where our future lies: in Europe and in the EU.

Photograph by Justin Tallis / AFP via Getty Images