Davey: Chancellor must order economic forecasts on UK-EU customs union ahead of Spring Statement
EMBARGO: IMMEDIATE RELEASE
Liberal Democrat Leader Ed Davey has called on the Chancellor Rachel Reeves to order an official analysis on the economic benefits of a UK-EU customs union, ahead of March’s Spring Statement.
He said that families and businesses worried about the state of the economy and public finances deserve “full transparency about the benefits that a closer trading relationship with Europe would bring.”
In a letter to the Chancellor, Ed Davey said the Treasury should commission the Office for Budget Responsibility (OBR) to analyse the impact a customs deal with the EU would have for the UK economy and public finances. He said these updated forecasts should be made public as part of the OBR’s forecasts due to be published alongside the Spring Statement on 26 March.
The Liberal Democrat Leader also urged Keir Starmer to begin talks on a UK-EU Customs Union in his meeting with EU leaders in Brussels expected on Monday 3rd February, with an initial first step of agreeing to join the pan-European customs scheme (PEM).
The OBR has previously forecast that the UK economy is set to take a 4% hit over 15 years due to the impact of Brexit. According to a recent study conducted by the London School for Economics, the Conservative’s Brexit deal has led to a £27 billion drop (6.4%) in the value of UK goods exports to the EU.
Liberal Democrat Leader Ed Davey commented:
“The Chancellor is tying herself in knots trying to think up new ways to grow our economy. But there’s a solution right under her nose: a new UK-EU customs union deal that boosts trade for British businesses and raises vital tax revenue for our public services.
“It’s a no-brainer. After years of damage thanks to the Conservatives’ botched trade deal with the EU, this would improve access to our biggest trading partner and put rocket boosters under economic growth.
“Families and businesses around the country are deeply worried about the state of the economy and our public services. They deserve full transparency from the government about the benefits that a closer trading relationship with Europe would bring.
“Keir Starmer should use his meeting with EU leaders on Monday to fire the starting gun on agreeing a new customs partnership with Europe. There is no time to waste in fixing the damage done by the Conservatives, cutting red tape for businesses and strengthening our hand with Donald Trump.”
ENDS
Notes to Editor:
Ahead of the inauguration of President Trump, Liberal Democrat Leader Ed Davey has called on the Government to negotiate a new customs union deal with the EU by 2030 at the latest (full speech here).
LSE research on the impact of the Brexit deal can be found here.
The Chancellor has confirmed the Office of Budget Responsibility is due to publish its latest outlook on the economy and public finances on Wednesday 26 March, the same day as the Spring Statement.
The letter from Liberal Democrat Leader Ed Davey to the Chancellor is as follows:
Dear Chancellor,
I am writing further to your speech on economic growth on Wednesday and ahead of the upcoming Spring Statement.
The Liberal Democrats understand the need to boost economic growth. The previous Conservative Government crashed the economy with their disastrous mini-Budget – sending mortgage rates spiralling.
But I urge you to be more ambitious in your plans to boost growth. Another legacy of the Conservative Government is their disastrous trade deal with the EU – which has caught British businesses, farmers and fishers in red tape. That deal is holding our economy back.
In your speech on Thursday, you said that you were “pragmatic about the challenges…from the previous government’s failed Brexit deal”. I welcome that rhetoric. But it will mean nothing if the Government fails to take the opportunity that is staring us in the face by comprehensively rebuilding our trading relationship with Europe. And so far, the Government’s approach – and lack of ambition – has left much to be desired.
So I ask you to look again at what I believe is an economic no-brainer: a new deal with the EU, with a UK-EU customs union at its heart. This will allow us to take off the handbrake that is holding the British economy back. And boosting the economy will raise vital revenue to pay for public services – allowing much needed investment to fix crumbling hospitals and making it easier for people to see their GP.
I urge you to commission the Office for Budget Responsibility to analyse the impact of a UK-EU customs union on the British economy and public finances, and make the analysis public as part of its forecasts to be published alongside the Spring Statement on 26 March.
Many families and businesses are deeply worried about the state of the economy and the public finances. They deserve full transparency about the benefits that a closer trading relationship with Europe would bring.
That way, we will be able to put a number on the benefit of this new deal to families up and down the country – not just in terms of growth, but also in terms of how it will enable us to fix public services like our NHS and schools which were neglected for so long by the Conservative party.
I look forward to hearing from you.
With best wishes.
Yours sincerely,
Ed Davey
Leader of the Liberal Democrats
