What rejoining EU single market would mean for UK’s economy

Andy Burnham has been told that taking Britain back into the EU single market would secure him a general election victory and give him a legacy akin to Tony Blair’s — but would it provide an economic boost the country so dearly needs? Nick Boles, who served as a minister in David Cameron’s government before quitting the Conservatives in 2019 over the party’s Brexit stance and is now a Labour adviser, has urged the new prime minister to strike a deal with European Union leaders that would protect the continent and boost the UK’s economy.

Boles is calling for the creation of a “European Confederation”, which he says would provide some of the benefits of European integration such as single market access and youth mobility, but without having to accept free movement or being forced to join the Eurozone. Burnham, whose Makerfield seat voted 64 per cent in favour of leaving the European Union in 2016, has previously said he would like to see the UK rejoin the EU in his lifetime.

According to Boles, the move to access the single market again would also deal a “devastating” blow to the Tories and Reform, securing victory in the next general election and writing Burnham into the history books. Economically, forging closer ties with Europe could provide a £92bn GDP boost to the UK, according to new economic research.

Commissioned by Best for Britain, which campaigns for full UK-EU reintegration, the research undertaken by Frontier Economics suggests at least 90 per cent of Brexit’s economic hit could be recouped by the UK rejoining the EU. Tom Brufatto, Best for Britain’s executive director of policy and research told The Independent: “While all moves towards closer EU relations are welcome, our polling shows that voters vastly prefer EU membership, especially those prepared to vote for Labour at the next election, and the £92bn GDP boost it would create.

“With the UK being a G7 economy and global military power, full EU membership is the only suitable way for us to benefit from access to the single market while ensuring we have a say over the rules that shape it.” Polling has shown Britons favour closer ties with the European Union, with research carried out by YouGov in June to mark 10 years since the EU referendum revealing that 59 per cent of voters support a closer UK-Europe relationship, compared with just 20 per cent who do not. When it comes to the single market, half of Britons support rejoining compared with 26 per cent who do not. However, Thomas Pugh, chief economist at RSM, a multinational network of accounting firms, said that rejoining the EU could be a “red herring” when it comes to the economy. “The impact of rejoining at least partly depends on what that means”, he told The Independent, and he believes rejoining under the previous terms the country had with the EU would have the biggest economic benefit but would be a “harder sell” to the country.

“Let’s say we go back in under the old arrangement. In that case, there would almost certainly be a net economic benefit to the UK. But it wouldn’t offset the losses we’ve already experienced”, he explained. “If we take the 4 to 6 per cent economic loss from Brexit, that’s largely from a combination of lower different migration, less investment and trade. “I don’t imagine we get a renewed surge in inward migration if we rejoin given the UK’s relative underperformance compared to most European countries, and attracting investment would be a struggle given other countries, like Ireland, have created very attractive regimes.

“We would benefit on the trade front, but this is limited given the UK’s small manufacturing sector.” A Deutsche Bank spokesperson told The Independent that rejoining the single market would primarily benefit the UK in terms of removing economic friction and red tape. 41 per cent of the UK’s exports in 2025 were to EU nations. “Re-entry would remove the bulk of the friction Brexit created, and crucially it would do so for services — the UK’s structural strength”, the spokesperson said.

“Beyond the direct trade channel, single-market membership delivers a productivity dividend that a customs union cannot. Deeper market integration intensifies competition.”

“OBR estimates suggest that the biggest cost from Brexit in the long run can be attributed to a productivity channel - a 4 per cent long-run productivity loss. Re-entry would also restore the labour-supply flexibility, investment certainty and FDI attractiveness that the uncertainty channel of Brexit eroded.”

The UK would have to weigh up what it would have to offer up for entry to the single market, the bank said, disagreeing with some of Boles’s claims. “The single market’s price is sovereignty”, it said. “Membership requires accepting the four freedoms — including freedom of movement — and submitting to EU regulation designed without a UK seat at the table. “It also implies a budget contribution. These are precisely the red lines that successive governments have ruled out, which is why the single market is the larger economic prize but the smaller political probability.”