Only taxing and spending can repair the damage of Brexit. Who will tell Labour?

William Keegan
Sun, 17 September 2023

Composite: Sinai Noor/Shutterstock

‘You made a mistake, Keegan. I don’t like mistakes. Just don’t do it again.” Those words were spoken by the then editor of the Financial Times, Sir Gordon Newton, early in my career and they have stayed with me. Newton had an air of great authority. I often sense his shadow leaning over me to this day.

Alas, the shadow was not in evidence a fortnight ago. I had been much struck by some remarks by the financier Guy Hands quoted in the New European, and I requoted them in this column. They included an excoriating attack on the band of financiers who had supported Brexit, in their own interests but certainly not of the country’s.

Unfortunately, I described Mr Hands as “a former Brexiter”. I had been told this in good faith by a normally reliable source (I had never met Mr Hands) and committed the cardinal error of not double-checking – a rare lapse, I like to think.

Anyway, his office got on to the paper and the error was corrected in the online edition. A brief correction was also printed on our letters page last week.

Nevertheless, I am well aware of the common complaint that often, when mistakes are made, the correction is less visible than the error. So I should like to take this opportunity to apologise publicly to Mr Hands for my mistake. Imagine! Accusing someone of being a Brexiter when he isn’t and never was! I hang my head in shame.

Apart from anything else, we live in an atmosphere where politicians play havoc with the truth. My acquaintance the late Lord Armstrong, when cabinet secretary, and in a spot, was quoted as saying that he had been “economical with the truth”. This was an echo of a line by Edmund Burke and struck quite a chord at the time.

These days, the practice of being economical with the truth, indeed of perpetrating outright lies – not quite the same thing – is commonplace. Indeed, interviewers on the radio occasionally have to point out to ministers that they are, shall we say, not quite telling the truth.

Which, almost inevitably, brings us back to the Brexit about which Mr Hands was rightly so scathing.

The disaster is now so manifest that even the timorous Labour party is beginning to take up the cudgels. I have spent a lot of time attacking the Tories for, first, calling that ignominious referendum in 2016, and then going ahead with inflicting on this country the most grievous act of economic and social harm in history. Talk about being economical with the truth: the leave campaign was a tissue of lies.

The latest example of the difference between the “Brexit freedom” myth and harsh reality comes from research by UK in a Changing Europe: since 2016, the institutions that were set up to replace our very productive relationship with the European Investment Bank (EIB) – which backed the construction of the Channel tunnel – have invested two-thirds less than we received from the EIB between 2009 and 2016. Hardly a boost to productivity…

Starmer now rarely misses an opportunity to rule out the idea of rejoining the EU in general or the single market in particular

But let us face it: if the Labour party had not been led by Jeremy Corbyn, there might have been some serious opposition to Brexit. As it was, the then Labour leader showed none of the wisdom of such predecessors as Harold Wilson, and, frankly, let the nation, and his party, down. Most people seem to assume that Corbyn was lukewarm in support of remain because he was himself a Brexiter.

Labour now has a leader in Sir Keir Starmer who was a passionate remainer and who for a time campaigned for another referendum, to revisit the scene of the crime.

He now rarely misses an opportunity to rule out the idea of rejoining the EU in general or the single market in particular – the rules of the latter having been influenced to a considerable extent by representatives of previous British governments. He tells us: “Just because we are outside the EU, it doesn’t stop us leading in Europe.” Oh yes?

Starmer is making some encouraging noises about greater cooperation with the EU, not least on the subject of asylum seekers. But whether such well-intended moves are going to be sufficient to repair the colossal economic damage resulting from our absence from the single market is highly questionable. The fact of the matter is that the damage of up to between 5% and 6% a year of our gross domestic product resulting from Brexit is going to limit any scope a new Labour government would have to repair the damage caused to public sector services by the austerity imposed by the Conservatives. The impact on tax revenues is about £50bn a year.

When I read that Tony Blair is calling upon Starmer to avoid any programme of tax and spend, I wonder what world our former prime minister is now living in.

The problems facing an incoming government are due to a considerable extent to the fact that there has not been enough taxing and spending in the past 13 years and, in order to repair the damage, there needs to be a lot more in the future.

Blair claims that he does not wish to be a backseat driver to a new Labour government. He has a funny way of showing this.