Brexit is the elephant in the Budget room
The build up seems to get longer and longer each year. The subtle hints and wild guesses about what surprises are in store are on everybody’s lips. It’s beginning to look a lot like Budget day.
All the incessant speculation, tension and “pitch-rolling” (which has got to be a late contender for Westminster-bubble-phrase-of-the-year) might be more palatable if the measures being teased were actually going to benefit everyday people - cutting the cost of living, addressing structural problems in our economy and laying the framework for a better future. But this isn’t what we’re expecting the Chancellor to come forward with today. Instead we’re being treated to a “smorgasbord” of tax rises and short-termist measures rather than a meaningful long-term vision of the economy.
Perhaps nowhere is this more vividly obvious than in the refusal to seriously consider a new customs union with the European Union - our largest trading partner and neighbour. The long shadow of the Brexit wars do indeed still hang over Parliament. But that shouldn’t preclude seriously reviewing our trading relationship - so that the ridiculous red-tape choking businesses that trade with the continent can finally be ripped up.
Any pragmatic government, any progressive government, indeed any government serious about unlocking growth in a sluggish economy, would be brave enough to tackle this head on. But Labour are letting short-termist decisions about spinning a particular political narrative - and not a particularly appealing one, as the polls seem to show - get in the way of making the right decision for the country.
We know that such a deal could be worth £25 billion to the UK economy - and it’s important to stress that this wouldn’t just be top-heavy growth for a few big companies. What makes our economy so special is the army of SMEs that embody our entrepreneurial spirit and cement the fact that the cliche of a “nation of shopkeepers” remains a valid one. A report published last year by the Chartered Institute of Export & International Trade showed that as many as 20,000 small businesses have stopped exporting to the EU since 2019.
The Liberal Democrats are clear on this - we have to start rebuilding our trading relationship with the EU. We aren’t afraid to point at the huge elephant in the House of Commons - Brexit has cost Britain dearly. Trying to skirt around that fact is like trying to start a fire in a wind tunnel. New analysis that we have commissioned from the House of Commons Library shows Brexit is costing us £250m a day. Over the course of a week that’s almost £2 billion pounds - significantly more than a certain infamous bus indicated we were paying into the EU budget per week.
Labour knows this. They have their hands on the levers of the economy and can see firsthand that our botched Brexit deal is holding back growth. Worse, they’ve even begun to openly talk about it, weaving it into their gloomy narrative. But they refuse to do anything meaningful about it.
The Customs Union isn’t a panacea - the Chancellor must be willing to be braver across other fronts too. She could cut VAT for hospitality to boost our high streets, raise revenue with a proper windfall tax and digital services tax on the big banks and social media giants respectively, and slash energy bills by removing the renewables levy. These are all ideas that have broad popular support, the backing of policy experts, and which the Liberal Democrats have been forthright in begging the Chancellor to steal from us. But the growth we need to birth jobs, boost productivity and bolster tax revenues won’t be unlocked without a customs union with the EU - and cementing those new, high-paying jobs and regional growth would be one of the fastest ways to tackle the cost-of-living crisis too.
It’s time to call a spade a spade - and a bad deal a bad deal. The Chancellor has, I’m sure, some surprises for us in store when she stands at the dispatch box later - but none would be more welcome than her finally having the confidence and the courage to say that she is embarking on a mission to renegotiate our trading relationship with Europe. She would have the backing of business across the country, 72 Liberal Democrat MPs, and a growing majority of the British public if she would finally take that vital step.
Luke Taylor is the Liberal Democrat MP for Sutton and Cheam.
