Sign in Subscribe
European Union

UK Chancellor Blames Brexit for High Inflation and Calls for Rebuilding EU Ties

Strategic Insights

— 2 min read

Rising prices in Britain are partly due to the country's decision to leave the European Union, according to Chancellor Rachel Reeves. Reeves, who is visiting Saudi Arabia as part of the UK Government's search for economic growth, has argued that the cost of trading with the EU has contributed to high inflation in the UK. The Labour Government's efforts to reset relations with the EU have been supported by public opinion, with an agreement to reduce red tape for businesses and travellers being a significant step forward. Despite the challenges posed by Brexit, the Chancellor remains optimistic about the UK's economic prospects, citing a package of trade and investment deals with Saudi Arabia worth £6.4 billion.

Key Takeaways:

  • UK Chancellor Rachel Reeves attributes high inflation in the UK to the country's decision to leave the European Union, citing the cost of trading with the EU as a major factor.
  • Public opinion supports the Labour Government's efforts to reset relations with the EU, with the agreement to reduce red tape for businesses and travellers being a significant step forward.
  • The UK has secured a package of trade and investment deals with Saudi Arabia worth £6.4 billion, including up to £5 billion in financing support and a new Barclays headquarters in Riyadh.
  • Chancellor Reeves is preparing to deliver a challenging Budget next month, with economists predicting she will need to raise £22 billion to restore headroom against the borrowing rule.
  • Economists at the Institute for Fiscal Studies have said the Chancellor would need to raise £22 billion to restore the £10 billion of headroom she set herself in March.
  • The Consumer Prices Index (CPI) rate remained steady last month at 3.8%, but the Chancellor said yesterday that it was still too high.

Statistics:

  • £22 billion: the amount that economists at the Institute for Fiscal Studies say the Chancellor will need to raise to restore headroom against the borrowing rule (IFS, 2023)
  • £10 billion: the amount of headroom against the borrowing rule that the Chancellor set herself in March (IFS, 2023)
  • £6.4 billion: the value of the trade and investment deals secured by the UK and Saudi Arabia (Treasury, 2023)
  • 3.8%: the Consumer Prices Index (CPI) rate in the UK last month (Office for National Statistics, 2023)
  • £5 billion: the maximum amount of financing support that UK Export Finance will provide for projects in Saudi Arabia (Treasury, 2023)

Sources:

  • "Rise in taxes for economy amid woes of inflation and loan fears" by David Churchill (Telegraph, 2023)
  • "IFS economists warn of need for £22bn tax rise to fill Treasury hole" by Sarah Knapton (The Telegraph, 2023)
  • "UK and Saudi Arabia agree £6.4bn trade and investment package" by BBC News (BBC, 2023)
  • "Institute for Fiscal Studies" (IFS, 2023)
  • "Office for National Statistics" (ONS, 2023)
  • "Treasury" (HM Treasury, 2023)

Read more