Rachel Reeves addressed the long-term economic impacts of the 2020 Brexit deal during a recent meeting of the International Monetary Fund (IMF), which included finance ministers and central bankers from various countries. In her remarks, she highlighted how the UK’s productivity challenges have been exacerbated by its exit from the European Union. Citing the Office for Budget Responsibility (OBR), Reeves mentioned a projected 4% long-term economic decline compared to remaining in the EU, indicating that the UK acknowledges this in its pursuit of stronger trade relationships.
The Labour Party has historically been cautious in discussing the negative economic ramifications of Brexit. However, since their conference last month, there has been a noticeable shift, with officials increasingly making these economic arguments. This change in approach coincides with broader discussions at high-level international economic forums, including the G7, China, India, and the EU.
Looking ahead, these points are expected to play a significant role in the government’s narrative as it prepares for the budget announcement scheduled for November 26. It is anticipated that new measures, including potential tax increases, will be justified by a downgrading of long-term UK productivity. The Office for Budget Responsibility is expected to provide details on this downgrade in its upcoming forecast.
Experts have noted a decline in investment post-referendum due to uncertainty, alongside an underperformance in goods trade, while others have pointed to strengths in services trade and opportunities for new global trade deals. The government is currently determining its negotiation stance for a “Brexit reset,” which includes reducing post-Brexit checks on food and agricultural trade and encouraging UK manufacturers to pursue European defense contracts.
European ministers have called for ambitious negotiations to alleviate the impact of global trade conflicts. Meanwhile, Reeves previously proposed tax increases to address public finances and now faces additional pressures to stabilize the economy. The Conservative Party has also outlined plans for significant public spending cuts should they win the next election.
Source: https://www.bbc.com/news/articles/cy0ypx859x8o?at_medium=RSS&at_campaign=rss