The EU would strangle our economy. Why rejoin?

Share this article

Andy Burnham is set to make the same mistake that led to the ruin of Keir Starmer: lack of a domestic agenda, other than pushing the proverbial peas around the plate on energy bills, bus fares and the like, paired – like a bottle of plonk – with ambiguous statements on the big public issues. To make up for the vacuousness, a debate has been opened on the EU front. Should the UK rejoin?

Looking back on the debate a decade ago, if I’m being honest, I would rather have remained in the EU. Our political leaders completely fluffed the opportunity of Brexit; widely purported freedoms and opportunities were left on the table. European and American friends of mine (with increasing bewilderment) ask what we have gained from Brexit – a few trade deals, the smoking ban, the Boriswave, VAT on private schools and a much, much larger state. Since 2016, the state has added 139,795 civil servants to its payroll.

So, being rational, I would have argued that we should have remained in and influenced the bloc as its second largest economy. Surely that means we should rejoin now?

No.

The EU of today is an entirely different creature to the one we would be paying £730 million a week to be a member of. Wrought with public unrest in France and Spain, fuelled by massive immigration from Africa and the Middle East, a resurgent hard-right in Germany, an attempted coup d’état in Poland and a continent-wide fiscal crisis, the list goes on. That’s just our potential bloc neighbours.

Our economic futures look radically different. Let’s look at compute for AI, the fourth industrial revolution. The UK alone has over one-fifth of the entire European Union’s compute capacity (which is slightly larger relative to our comparative GDPs), according to EpochAI. We are home to some of Europe’s leading innovative companies. We have Europe’s largest AI sector, which takes around 30% of European biotech venture funding, with more quantum startups than any other European country, and we host AstraZeneca and GSK, two of the continent’s largest pharmaceutical companies.

In Brussels and Strasbourg, meanwhile, the priority is not developing the companies of the future but growing the regulatory burden. Mario Draghi’s 2024 report into EU deregulation, which was sincerely accepted by the Commission, has been slow to roll out. Out of 383 deregulation measures analysed, a mere 60 (or, a meagre 15.7%) have actually been fully carried out. When it comes to GDPR, there are clear signs of inertia. Across 61 countries, companies targeting EU markets saw an 8% reduction in profits and a 2% decrease in sales, while large technology companies saw no statistically significant negative impact.

Larger companies and entrenched incumbents in the UK would be delighted to rejoin the EU. But the same cannot be said for the dynamic start-ups which define the prestige and dynamism of Britain. The aforementioned Draghi Report found that between 2019 and 2024 the EU adopted around 13,000 acts. All the more regulations and rules, to be prioritised over economic growth. Why rejoin, subject ourselves to a new wave of rules and, most likely, end up joining the euro?

For all of our problems, which as Britain’s most read wonk-blog, CapX leads on analysing and proposing solutions for, I would wager that subjecting ourselves to a fresh round of discord and instability would be more harmful to growth than carrying on with our current lot. We cannot allow ourselves as a polity to be sidetracked by politicians seeking to distract from the mess they have got us into, by suggesting another referendum. Or worse, a complete betrayal of the British people’s vote in 2016 with a decision by fiat to re-enter.

Share this article