Beware of kites flying in Westminster. Trade barriers with the EU.


Beware of kites flying in Westminster 

By Benjamin Fox & Eleonora Vasques
Reports that UK ministers are looking at ways to scrap trade barriers with the EU to give businesses easy access to the EU’s single market, a la Switzerland, betray several things. 

Firstly, Rishi Sunak’s government recognises that the Trade and Cooperation Agreement is a poor substitute for EU membership in terms of trade, particularly as the UK enters what seems set to be a prolonged recession. 

Alongside trade in goods and services, the end of freedom of movement also carries a major economic cost. 

The UK is particularly reliant on high levels of net migration. According to the House of Commons Library, more people have come to the UK than left each year since 1994.  

Since the end of freedom of movement in January 2021, more EU nationals left the UK than arrived – an estimated 12,000 in the year ending June 2021. That has been offset by a large increase in third-country migration. Figures published on Thursday (24 November) by the Office for National Statistics in London stated that net migration hit a record high of 504,000 in the past year, up from 173,000 in the previous year.

The Office for Budget Responsibility has forecast that net migration will be at around 200,000 a year from 2026 onwards. 

Even so, businesses are panicking that they cannot fill the 1.2 million job vacancies across the UK, with the hospitality, agriculture and tourism sectors in particular trouble, and are calling for the rules on EU nationals to be relaxed. 

However, on migration, the economic will is coming up against the political won’t. Home Secretary Suella Braverman says that she wants net migration to be in the tens of thousands, echoing a promise made over a decade ago – and never kept – by former Prime Minister David Cameron. 

Earlier this week, both Sunak and his Labour counterpart Keir Starmer both played down the prospect of loosening the UK’s new immigration rules to increase economic migration. Instead, they said that businesses should focus primarily on the 7 million people in Britain who are unemployed and not looking for a job.  

If Sunak is in hock to his party, for whom a hard Brexit is an article of faith, Starmer is trying to reassure the voters in northern England and Wales who voted for Brexit in 2016 and then Boris Johnson in 2019 that he will not re-open the question of EU membership. Consequently, Labour has ruled out a return to the EU single market and freedom of movement. 

The irony of trying to copy the EU-Swiss arrangement is that neither the Swiss nor the European Commission think it is a model worth copying. Besides, the European Commission rejected a UK proposal to have single market access without freedom of movement when Theresa May was Prime Minister. 

Sunak’s Conservative party are around 25% behind Labour in opinion polls, a margin that will take a near miracle to overturn in the next two years. It is also hard to imagine that a Labour government would not seek closer economic and political ties with the EU. In other words, the kite-flying in Westminster, and the wider state of UK politics, suggests the current Brexit settlement is unlikely to remain intact for long.