Rejoining the EU’s customs union could hammer Britain’s economy to the tune of £40billion a year, Sir Keir Starmer has been warned.Economists at the Prosperity Institute have accused the Prime Minister of pursuing a “fatally flawed” strategy that risks dragging the UK back into the European Union’s orbit and into economic decline.The PM has said the Government must “look again” at its relationship with Brussels and hinted at closer alignment with the bloc.Meanwhile, Chancellor Rachel Reeves has described stronger EU ties as the country’s “biggest prize”, indicating she is prepared to go further in pursuit of economic cooperation.
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Some say the cost could be enormous. According to the Prosperity Institute, re-entering a customs union with the European Union would shave 0.5 per cent off GDP in the first year alone.Within five years, the hit would rise to 1.35 per cent — the equivalent of £30billion to £40billion in lost output annually.Fred de Fossard, an economist at the think-tank, warned Britain would be “locked into” a stagnating European market.”British businesses have thrived since leaving the EU,” he said. “The EU economy is in decline, demand for goods is lower than in the past, and its industrial base is being eroded. It is not the economic powerhouse it once was.”British firms would be shackled to a captive market. This is what the EU wants — and we shouldn’t give it to them.”The intervention comes amid growing signs Labour is softening its stance.While the party’s 2024 manifesto ruled out rejoining the existing customs union, and Sir Keir insisted as recently as December it was “not currently our policy”, pressure is mounting from within Labour ranks.Some 13 MPs have already backed proposals to begin negotiations on a bespoke customs arrangement.LATEST DEVELOPMENTSKeir Starmer’s ‘desperate politics’ torn apart by Priti Patel: ‘A failing Prime Minister’Labour threatens Vladimir Putin with crippling new sanctions over Alexei Navanly ‘murder’ by RussiaKeir Starmer’s ‘desperate politics’ torn apart by Priti Patel: ‘A failing Prime Minister’Last year’s “reset” deal saw Britain align with EU plant and animal health rules in exchange for smoother trade — at the cost of granting 12 years’ continued access to British fishing waters.Farmers have warned the changes could wreak havoc on UK agriculture, with tougher EU standards threatening domestic producers.Dozens of pesticides and herbicides currently permitted in Britain are banned across the Channel.The Institute also raised concerns over Labour’s decision to rejoin the Erasmus Plus programme, claiming it would require Britain to issue visas to tens of thousands of EU nationals while subsidising European universities with taxpayer cash.Additionally, any move back towards Brussels could provoke Donald Trump and jeopardise hopes of a future UK-US trade deal.The US President has repeatedly blasted the EU’s sluggish growth and heavy-handed regulation.The Prosperity Institute argues Britain’s post-Brexit trade freedom has already delivered more than 70 deals worth £164billion — gains it says would be undermined by closer EU alignment.Downing Street rejects the criticism. A Government spokesman insisted the new strategic partnership with the EU is “in our national interest” and could add up to £9billion a year to the economy — without crossing Labour’s red lines of rejoining the customs union, restoring freedom of movement or returning to the single market.Our Standards:
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