Realigning Britain with the EU while betting big on the South of England getting even richer shows the Chancellor hasn’t grasped why Brits voted for Brexit.
The Chancellor and the Prime Minister are blaming Brexit for Britain’s woes (Image: Getty Images)
Rachel Reeves has revealed the tragic error at the heart of Sir Keir Starmer’s Government which threatens to doom Labour and trap Britain in economic mediocrity. The Chancellor does not look as if she likes the country she leads. She believes a majority of Brits made a grave mistake when they voted to leave the European Union and she is on a mission to “align” with the bloc. Nearly a decade on from the historic referendum, she comes across as clueless in a landmark Times interview as to why 17.4 million people defied the warnings of the political establishment she embodies and voted to cut the cord with Brussels.
The country yearned to restore true democracy and revive the great swathes of the UK which have languished while London and the South East have enjoyed the rewards of globalisation. Her plans to once again agree common rules with the EU is not the type of leadership that will inspire the millions of voters who have abandoned Labour; and her big bet on turbo-charging the Oxford-Cambridge “corridor” will bring no comfort to families who long to see former industrial heartlands once again home to good jobs.
It is as if she is on a secret mission personally designed by Nigel Farage to sabotage Labour’s hopes for survival in Red Wall seats. Brexit unlocked huge opportunities that would have once excited a Labour Chancellor. There is regained freedom to invest in struggling industries and kickstart growth in exciting new sectors while striking trade deals with countries that are ablaze with potential.
This is the opposite of a laissez-faire approach to the economy but it requires bold ideas, strong leadership and – above all – faith in Britain’s capacity to succeed.
In her interview she shows no sign of a burning ambition to unlock such opportunities but instead a desire to get back into the Brussels club where commissioners from foreign countries devise red tape which Britain must follow; where our capacity to help our industries is constrained by state aid rules.
“Brexit has not been good for our country, for growth, for prices in the shop,” she declares.
The pandemic was not good for the UK, nor was Russia’s invasion of Ukraine and the subsequent energy shock, and war in Iran has unleashed a new chapter of instability and a surge in oil prices.
But legions of Britons – including many of those who voted Remain – would say the greatest self-inflicted blows were the decisions the Chancellor took to push taxes back up to the levels of the early 1980s and make it more expensive and risky to give people jobs.
She moved into her Downing Street home in July 2024 with grand ambitions to grow the economy. How is that going? In January zero growth was recorded. This failure cannot be blamed on the war on Iran or Britain’s status outside the EU.
There was a 2.7% fall in food and drink services. Not only is that a hammer blow for a hospitality industry facing a business rates crisis, it shows Britons lack confidence in the economy and their jobs and are cutting back on pleasures. That is the outcome of Ms Reeves’s policies.
The political futures of the PM and Chancellor are bound together (Image: Andy Stenning/Daily Mirror)
With Labour tied with the Greens on just 17% in the polls (behind the Tories on 18% and Reform UK on 27%), she is trying to stop pro-EU, Left-leaning voters abandoning Labour.
With the Prime Minister’s career in the danger zone, she is signalling to EU-nostalgic Labour backbenchers who are tired of the party addressing the concerns of Reform-curious voters that she shares their values. Her statement that Britain’s “future is closely intertwined with that of Europe” looks like an attempt to try and win back the anti-Farage vote.
Of course Britain will have a close relationship with Europe. Our proudest moment of the last century was liberating our friends and allies from Nazi rule and then laying the foundations for decades of unprecedented peace and prosperity.
Defending democracy in Europe remains a strategic imperative for our own survival and we should aim to deliver goods and services that will meet the needs of consumers across the continent while investing in defence. That is not synonymous with aligning with the regulations which turned a generation of MPs into rule-takers instead of rule-makers, implementors instead of innovators.
Brexit was born in wretched circumstances but Britain will not grow if our Chancellor sees independence from the EU as a problem to be circumnavigated. The UK will not go forward if our leading politicians are fixated on subtly reversing history.
The facts are clear. This country had a trade deficit with the EU of £90billion in 2024 but a trade surplus of £68 billion with non-EU states. The Government’s energy should be focused on radically boosting growth in those non-EU markets which will multiply in size in the coming decades.
Britain’s freeports experiment is delivering exciting results, with £6.4billion of private investment going into the sites. There is the potential to go much further.
There must be no weakening of ambition when it comes to trade deals. The free trade agreement with Australia came into force on May 31, 2023; in the 12 months to June our trade with Australia has soared by 14.3% when compared with the year to June 2023.
It will require leadership and the full resolve of Government to help companies take advantage of these and other deals with emerging powerhouses and we will miss this chance if Whitehall’s focus is on squeezing ever closer to the EU.
The Chancellor has not restored growth and the challenges are about to get tougher (Image: Getty Images)
Ms Reeves’s other big bet is on growth around Oxford and Cambridge.
“If we want to unlock the full potential and make that Oxcam corridor the Silicon Valley of the whole of Europe, the government has got to partner with business to unlock that,” she says.
This is a far cry from the levelling-up vision of Boris Johnson.
Yes, Britain’s greatest university cities should be hotbeds of innovation – and it is worrying that so many world-changing companies are born in the vicinity of California’s Stanford University while the UK struggles to fuse knowledge and entrepreneurship. But she needs a vision for how wealth can be generated beyond already-rich regions.
Instead of obsessing about Silicon Valley, she should look at Washington State, the home of Amazon and Microsoft, not to mention Starbucks. This rainy state is nearly 3,000 miles away from the financial capital of New York but it is home to graduates bursting with ambition and talent.
Could Manchester, Leeds or Newcastle – to name just three cities with giant student populations and magnificent centres of learning – become the Seattle of Europe? It is something to aim for, and it is not clear where the Chancellor is aiming other than at taking Britain back into the orbit of Brussels.
That raging sense of inequality and squandered opportunity which drove a majority of Britain to vote for Brexit in 2016 is even stronger 10 years on. The Chancellor should escape Downing Street and the Treasury and spend more time listening to voters in her Leeds West and Pudsey constituency.
Instead of sabotaging the economy and her party, Ms Reeves should look up from her spreadsheets and set her sights on an array of opportunities which should thrill her heart. With the right leadership, Britain can escape decline and flourish – and that is a better legacy to fight for than plugging us back into the Brussels bureaucracy.