£25bn Annual Boost to British Exports Hangs in the Balance as Starmer Seeks Brexit Reset Deal

Strategic Insights -

The UK's chances of securing a Brexit reset deal hang in the balance as Sir Keir Starmer pushes for a £25bn annual boost to British exports. The deal would see the removal of trade barriers on goods, including food and drink, electrical items, and other products, resulting in a 2.2% uplift in gross domestic product in the long run.

Key Takeaways:

  • A Brexit reset deal could lead to a 2.2% uplift in gross domestic product in the long run, resulting in a £25bn annual boost to British exports.
  • Removing trade barriers on goods, including food and drink, electrical items, and other products, could support the economic growth the prime minister so desperately wants to deliver.
  • The deal could include closer defence cooperation, goods and services, and a youth mobility agreement, allowing 18-30 year olds to live and work in the UK and Europe for a time-limited period.
  • The UK could gain access to the £150bn EU defence procurement fund and join the EU data hub, with immediate benefits estimated at £150bn.
  • Farm food exports alone could see a £3.2bn increase under the deal, with agricultural exports suffering since Brexit, down by more than a third.
  • The EU would also benefit from the deal, with a £22.4bn boost to exports in goods and services, including £5bn more in agricultural products.
  • The long-awaited youth mobility scheme alone could boost GDP by 0.45% in the next decade, with the Centre for European Reform estimating that the scheme could raise GDP by bringing more young EU workers into the UK labour force.
  • However, EU officials want lower fees for EU students, causing tension ahead of Monday's talks, with the number of EU students at UK universities having dropped nearly in half since Brexit.
  • Lowering fees for EU students could result in a positive impact, as EU students spend around £61,000 on average over the course of their studies, on top of their tuition fees.

Statistics:

  • £25bn annual boost to British exports if a Brexit reset deal is achieved.
  • 2.2% uplift in gross domestic product in the long run if trade barriers are removed.
  • £150bn estimated benefit to the UK from gaining access to the EU defence procurement fund and joining the EU data hub.
  • £3.2bn estimated increase in farm food exports under the deal.
  • £22.4bn boost to EU exports in goods and services, including £5bn more in agricultural products.
  • £61,000 estimated spend by EU students in the UK over the course of their studies, on top of tuition fees.
  • 75,000 EU nationals enrolled in British colleges and universities in the 2023/24 academic year, down from 148,000 in 2019.

Sources:

  • Frontier Economics, "Brexit: Economic Impact of a Customs Union and Single Market Access" (2023)
  • National Institute for Economic and Social Research (NIESR), "The Economic Impact of a No-Deal Brexit" (2022)
  • Lord Jim O'Neill, former economic adviser to Gordon Brown, quoted in The Independent
  • Chris Southworth, director general of the International Chambers of Commerce (ICC), quoted in The Independent
  • Amar Breckenridge, senior associate at Frontier Economics, quoted in The Independent
  • Centre for European Reform, "Youth Mobility and Economic Growth" (2022)
  • The Independent, "Brexit: The facts" (2022)