The closest Britain has to a trustworthy forecaster of the nation's finances is the OBR, which is independent of the Treasury and unbiased - by law. They maintain that Brexit will cost 4% of GDP in the 'long run' - a period they define as 15 years. That was in 2020, so by 2035, we will be about £100 billion a year (at today's prices) down due to Brexit. Their more recent assumptions about Brexit from May this year can be seen HERE.
For the sake of argument let's assume this is correct (some like John Springford at the CER think we are already 5% down using the doppelganger method) and the impact is linear. It means that each year we will lose a little GDP until we hit 4% in 2035. However, I don't believe the OBR thinks we will then be stuck permanently at 4% below where we would have been without Brexit. Nobody knows what might happen after that but it's not unreasonable to assume we will continue to lag behind at a similar rate, so that is my third assumption.
I am quite certain that the UK will one day rejoin the EU and it follows therefore that the greatest loss of GDP - and more importantly tax revenue - will occur in the last year before we rejoin. As in compound interest where the first pound invested makes the most, the annual Brexit costs will grow yearly. By the time we rejoin, the cumulative total could easily exceed a trillion pounds, none of which we can ever hope to make up in the future.
It is also clear that the EU doesn't need the UK, especially if Ukraine and other countries like Georgia and Moldova accede to the union. Poland is set to become wealthier (per capita) than the UK by 2023.
Most commentators seem to believe the EU will be in a position to drive a hard bargain and will do so. There will be no rebate (adding permanently to the cost of Brexit), and Scotland may well be independent. We will be an impoverished country applying to join under worse terms than we had pre-2016. We may be forced to adopt the euro.
A future government will then be faced with a choice. Accept the terms offered, suffer further decline at the same rate and thereby continue to add to the cost of Brexit or press on and try to convert Britain into a low-regulation, low-tax Singapore on Thames. An option which the British people will never accept and don't deserve.
All of which brings me back to Labour's Brexit policy. It implicitly recognises that Brexit and the TCA are taking Britain in the wrong direction economically. Why try to negotiate better terms if you're happy with the status quo? The effect of Starmer's policy will be slow the rate at which the costs of Brexit are accumulating. It isn't going to stop or reverse them.
If the technical changes proposed only have a minimal impact what do you do then?
In my experience, if you find yourself travelling in the wrong direction, making a tiny course correction doesn't help much. The best thing to do is a 180-degree U-turn as early as you can. It saves time and money in the long run.
This is what Starmer will be forced into sooner or later.
