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The end of the Brexit dream

The end of the Brexit dream

by host
The end of the Brexit dream

LONDON — British voters head to the polls Thursday for their first general election outside the European Union. But in so many ways, the Brexit dream has already died.

All the key Vote Leave characters have left the stage. Five years after winning a landslide election Boris Johnson is out of parliament, making millions from speeches and newspaper columns. Michael Gove has quit politics rather than suffer life in opposition. Dominic Cummings spends his time writing blogs about Dostoevsky, TikTok and the CIA.

As the architects of Britain’s departure from the EU contemplate a decade out of power, the country they envisaged during the 2016 referendum campaign looks further away than ever.

Radical plans to tear EU regulations off Britain’s statute books en masse have already been abandoned. The benefits of buccaneering free trade agreements (FTAs) have proved elusive. Britain’s public services, far from receiving a promised boost, have in many cases almost stopped working. The number of people moving to Britain from abroad is higher than ever.

It’s not what advocates of Leave had in mind. And there are good reasons to suspect that a Brexit high-water mark has now been reached.

Keir Starmer’s Labour Party — seemingly on the verge of winning a historic majority in the July 4 election — has pledged to leave the current Brexit settlement largely intact. Ardent Remainers hoping Britain might re-enter the EU under his leadership are likely to be disappointed. Labour’s slogan is “Make Brexit Work.”

Keir Starmer’s Labour Party has pledged to leave the current Brexit settlement largely intact. | Alishia Abodunde/Getty Images

But Brexiteers don’t trust Starmer — a social democrat who previously campaigned for a second referendum he hoped would reverse Brexit — to finish the job. In fact, they don’t trust him, full stop.

“I’m afraid the Labour Party doesn’t have the right instincts,” said Steve Baker, the longtime ringleader of Tory Euroskeptic lawmakers in parliament, and currently a government minister. “It’s likely to just mess things up.”

‘What price will Labour pay?’

As the election has drawn closer, Labour has hinted it would be open to signing up to EU rules in sectors like agriculture, food and chemicals.

“I don’t think anyone voted Leave because they were not happy that chemicals regulations were the same across Europe,” the opposition’s finance chief, Shadow Chancellor Rachel Reeves, told the FT last month.

Daniel Hannan, a Tory MEP for more than two decades and ardent Euroskeptic, fears Labour will go further. (He also protests that his 2016 book advocating Brexit includes “a lengthy section” on the pitfalls of EU-wide chemicals regulation.)

“Note that Labour’s plan is not for mutual recognition — but a proposal for Britain to follow whatever the EU is doing,” Hannan said. “Remember how Keir Starmer kept demanding a second referendum? … The only question is what price Labour will pay to get back into [European Commission President] Ursula von der Leyen’s good books.”

UK NATIONAL PARLIAMENT ELECTION POLL OF POLLS

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For more polling data from across Europe visit POLITICO Poll of Polls.

Hannan expects Labour to “give up on deregulation” entirely and take the U.K. “back into EU standardization.” As a result, he said, efforts to sign more post-Brexit free trade agreements around the world would be halted.

The free trade vision

Striking FTAs with non-EU countries was one of the big promises of Brexit — and the most prominent economic justification for leaving the EU’s customs union and regulatory orbit.

“The argument was more or less that yes, we will trade less with the EU, but this will be compensated for by more trade with the wider world,” said Joël Reland, a research fellow at the UK in a Changing Europe think tank.

Have these agreements been worth it? “The short answer is no,” said Nicolò Tamberi, an economist at the University of Sussex Centre for Inclusive Trade Policy.

Most of the agreements signed since leaving the EU, Tamberi noted, are “replacement agreements continuing EU agreements” such as those with South Korea and Mexico. The genuinely new deals, with Australia or New Zealand, are with “small and very far away countries that are “not natural trade partners of the U.K. and cannot add very much.”

Indeed the official numbers are somewhat embarrassing. The U.K. government’s own Office for Budget Responsibility believes leaving the EU will hit U.K. GDP by around 4 percent over the long term, a figure it has reconfirmed as recently as March 2024.

By contrast, the U.K. government’s own estimates put the value of the new post-Brexit trade agreement with Australia at just 0.08 percent of U.K. GDP. The New Zealand deal is even smaller, clocking in at 0.03 percent. A flagship Indo-Pacific deal, CPTPP, is worth 0.04 percent. These are marginal gains, at best.

“I think on those premises, the argument has fundamentally failed,” Reland said. “They by no means compensate for what has been lost.”

Government ministers appear to have recognized this, at least implicitly.

Kemi Badenoch, the U.K.’s Brexit-backing business and trade secretary, said when she started her job that her office would stop being a de facto “Department for Free Trade Agreements.” She dialled back the hunt for new FTAs and focused officials on striking fewer, better deals — an agenda which has proved no less challenging.

Badenoch and Prime Minister Rishi Sunak have also reluctantly accepted that one long-promised prize of Brexit is unlikely to happen any time soon: a trade deal with the United States. The agreement was the victim of political change in Washington, but also fears on this side of the Atlantic that Brits could be subjected to such American delicacies as chlorine-washed chicken and hormone-fed beef.

“I cannot see any world in which a Labour government signs an FTA with the United States,” Reland said. “It is one of the things that most Conservative prime ministers would dream of — and even they have been unable to do it. The political barriers are too strong in terms of what you have to accept with U.S. regulatory standards.”

The U.K. government’s own Office for Budget Responsibility believes leaving the EU will hit U.K. GDP. | Daniel Leal/Getty Images

This disconnect between what the leaders of the Brexit movement thought leaving was about and what the British public will actually live with has been a key tension since 2016 — and one that has scuppered many a vision of the future.

“There was this quite big emphasis on sovereignty and regulatory freedom in the campaign and certainly amongst politicians who campaigned for Brexit, but their perception of what Brexit meant was quite different to the general public’s,” Reland said.

“If you look at public attitudes towards regulation in general, people support high standards in almost all areas.”

Bonfire of EU laws

A similar dynamic has played out in issues ranging from workers’ rights to environmental protection. Threats to turn the U.K. into an offshore anarcho-capitalist paradise — occasionally used by British negotiators to threaten their EU counterparts — have in practice gone down no better in Bristol or Birmingham than they did in Brussels.

Deregulation, for many leaders of the Brexit movement, was the point of leaving the EU — and the reason the cause has such deep roots on the Thatcherite right wing of the Tory party. Margaret Thatcher herself in 1988 complained that she had not spent a decade “throwing back the frontiers of state at home” to see them reimposed by Brussels — arguably lighting the touch-paper for modern British Euroskepticism.

But efforts to scrub the U.K. statute books of EU law have also floundered. One of the most memorable videos of Rishi Sunak’s Tory leadership campaign featured a suited man feeding piles of documents marked “EU legislation” into a shredder, alongside a pledge to “review or repeal” all EU laws within Suank’s first 100 days as prime minister.

Tory members were delighted, but the idea was swiftly abandoned in office. The justification for the U-turn? “I am not an arsonist. I’m a Conservative,” said Badenoch, putting her defense to disappointed Euroskpetic MPs last year.

“It’s never been tried before, probably for good reason: no one has ever tried to unilaterally remove a core pillar of their legal system overnight,” said Reland.

The Tory manifesto still boasts of having scrubbed thousands of laws from the statute books — but fails to add that most of the deleted regulations had long ceased to actually do anything.

“Ninety-nine percent of them are redundant — they relate to things like the 2001 foot-and-mouth crisis or the EU’s trading relations with Solomon Islands,” Reland said.

Deregulation, for many leaders of the Brexit movement, was the point of leaving the EU. | Justin Tallis/Getty Images

Some Tories still dream of the kind of line-by-line deregulation exercise originally envisaged. Conservative minister Baker said that what’s needed is “a thoroughgoing review of regulations to drive anti-competitive distortions out of the market and drive up welfare through competition and productivity.”

“I just don’t see the Labour Party doing that: I think that they will just increase bureaucracy and state power, and that will further grind our country down,” he said.

Record migration levels

Other Brexit visions have also had a tendency to explode on contact with competing government priorities.

Immigration, perhaps the most prominent driver of the 2016 Brexit vote, is arguably the one area where the U.K. has genuinely overhauled its rules in a big way since leaving the EU.

Yet despite ending freedom of movement with the Continent, net migration to Britain has increased sharply in the years since Britain left. At the end of 2019 the U.K.’s Office for National Statistics recorded a net 332,000 arrivals: by 2023 this had spiked to a record high of 722,000.

Despite virtually every politician in Britain telling voters they want fewer arrivals, competing economic pressures have pushed ministers to use their absolute control of immigration rules to quietly liberalize.

“The increase in net migration from 2019 to 2023 resulted mostly from non-EU citizens coming on work and study visas,” said Ben Brindle, a researcher at the University of Oxford’s Migration Observatory.

“Universities started to recruit students overseas more actively as their financial situation deteriorated, while social care providers turned to migrant care workers to fill vacancies as poor pay and working conditions in the sector, caused by limited government funding, made it increasingly difficult to retain workers.”

Elsewhere, bold promises during the EU referendum that the U.K.’s beloved National Health Service could be resuscitated with money redirected from Brussels have also failed to deliver. OECD figures collated by the Health Foundation think tank show the U.K. still spent at least a quarter less on its health services in 2022 than France, the Netherlands and Germany.

Stephen Rocks, an economist at the Health Foundation, told POLITICO: “The U.K.’s economy is already smaller and will grow more slowly because of Brexit. Weak economic growth has been at the heart of our struggle to fund health care and other public services adequately for more than a decade.” Max Warner, a health economist at the Institute for Fiscal Studies, added that “NHS performance against many measures is substantially worse than in 2016-17.”

Beyond peak Brexit

It all adds up. Guy Verhofstadt, the outspoken ex-prime minister of Belgium who represented the European Parliament in talks between London and Brussels, thinks “Peak Brexit” has already been reached.

“I think that more and more after the election we will see a growing pressure to step-by-step to go back in a direction of a more sensible approach,” he told POLITICO.

Bold promises during the EU referendum that the U.K.’s beloved National Health Service could be resuscitated with money redirected from Brussels have also failed to deliver. | Peter Nicholls/Getty Images

“I think the peak was at the moment that the hardliners in the Tory party decided to go for a hard Brexit: I don’t think that you can go further than what we have now.”

For Verhofstadt, who is now president of the European Movement campaign, the Brexiteers’ biggest mistake was deciding to leave the EU’s single market.

“If you cut off your ties with your main export market you’re asking for difficulties. That was clearly said by every economist,” he said.

“I think what is already happening now will continue. Britain is back in Horizon; tomorrow maybe Erasmus, and after tomorrow the customs union, defense and so on and so on.

“And then later on maybe people will ask themselves, why are we not in there? Because we are following these rules, and maybe it’s better that we have a say about what these rules are.”

But for Baker, now contemplating life outside government in a land far removed from his vision of Brexit Britain, the prospect of an actual return to the EU still seems far-fetched.

“The EU doesn’t want us back,” he said. “And they don’t want to have to renegotiate the settlement that took eight years to reach.

“We could expect reasonable adjustments and improvements to the Trade and Cooperation Agreement and the Windsor Framework” — the two key post-Brexit deals Britain signed with the EU. “That would happen with any government.

“But the overall framework of our relationship with the EU, I believe, is now fixed for a generation — and I think it is magical thinking to believe otherwise.”

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