Reeves stresses on economy damage caused by Brexit deal
(MENAFN) Chancellor Rachel Reeves highlighted the lasting economic impact of the 2020 Brexit agreement during her address at a key international economic forum hosted by the International Monetary Fund (IMF). Speaking to top finance ministers and central bankers, Reeves said, “The UK's productivity challenge has been compounded by the way in which the UK left the European Union.”
She cited the Office for Budget Responsibility’s assessment that the UK faces a 4% long-term reduction in economic output compared to remaining in the EU, emphasizing that this loss is being taken into account as the government seeks stronger global trade ties.
Labour ministers have historically been cautious in discussing Brexit’s negative economic consequences. However, since the party conference last month, they have increasingly stressed these impacts on the national economy. By raising the issue in such a high-level international forum—including representatives from the G7, China, India, the EU, and the European Central Bank—Reeves signaled a clear shift in emphasis, which is expected to feature prominently in the lead-up to the November 26 Budget.
The upcoming Budget is expected to outline further fiscal measures, potentially including tax increases, to address the long-term productivity downgrade. Analysts attribute part of the UK’s economic slowdown to reduced investment following the referendum and weaker performance in goods trade, though services trade and global trade deal opportunities have remained relatively robust.
The government is also preparing a “Brexit reset” strategy, which could remove most post-Brexit checks on food and agricultural trade and help UK manufacturers compete for Europe’s growing defense contracts. European ministers have urged the UK to pursue ambitious trade policies to offset global trade disruptions.
At her first Budget last November, Reeves introduced $50.8 billion in new taxes, including increases to employer payroll contributions, assuring that such measures would not be repeated annually. Yet, she now faces additional pressure to repair public finances.
By contrast, the Conservative Party has proposed a sharp reduction in public spending, pledging to cut $59.7 billion annually if re-elected, targeting welfare programs, civil service budgets, and foreign aid.
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