Ten years after the Brexit referendum, Labour’s EU “reset” deal is drawing sharp criticism from trade specialists and economists for failing to deliver meaningful economic gains.
Two separate reports published to coincide with the anniversary warn that the government’s landmark agreement with Brussels will not meaningfully boost the UK economy.
The Business and Trade Committee, comprising 11 MPs drawn from across the political parties, concluded that the reset deal would not generate any near-term growth despite recent declarations from the Prime Minister.
MPs identified a stark “rhetoric-reality gap” in the government’s framing, noting the current terms would add just 0.5 per cent to GDP by 2040 even under an “optimistic scenario.”
Liam Byrne, chair of the committee, criticised ministers for speaking openly about Brexit’s economic damage while failing to secure meaningful gains in return.
He said: “Business cannot invest on political signalling alone. It needs clear rules, a clear destination and a credible vision.”
Byrne added: “Ministers must now get off the fence, set out where they want Britain’s relationship with Europe to be by the end of this Parliament, and provide the roadmap to restore confidence, strengthen our security and deliver the growth the country needs.”
The committee raised alarms across five areas, including a failure to deliver immediate growth, defence shortcomings, delayed electricity trading negotiations, a lack of clear strategy, and disputes over “dynamic alignment” with EU regulations.
The committee also criticised the government for failing to secure a steel trade agreement with the EU despite manufacturers’ heavy reliance on metal imported from across the Channel.
At least six policy recommendations made by the committee have seen no progress whatsoever, according to the report’s findings.
The Centre for Policy Studies, a right-leaning think tank, published its own separate research into the costs and benefits of the reset deal on the same day.
Gerard Lyons, a former contender for governor of the Bank of England, said the reset plans were “no substitute for a credible growth strategy” and risked holding the UK economy back through regulatory opportunity costs.
Lyons warned the UK should not “tie our hands and refuse to use the post-Brexit levers that can impact our regulatory, trade and growth policies.”
He also cautioned that Britain risked “saddling” itself to a low-growth trading bloc whose share of the global economy has declined over the past decade.
Policy Exchange, another Westminster think tank, found that the reset deal’s food standards provisions could cost the UK more than the government’s own estimate of the deal’s benefits.
Lord Lilley, a former trade secretary who oversaw the UK’s entry into the EU single market, warned that industries from fishing to pharmaceuticals could face billions of pounds in additional costs from greater red tape.
Despite widespread criticism of the reset, the British Chambers of Commerce found that businesses still favour closer trade ties with Europe, with over half of exporters saying the existing framework makes it harder to sell goods and services abroad.
Firms cited VAT complexity, border red tape, and a lack of coordination on professional qualifications as key barriers standing in the way of smoother trade with the EU.
William Bain, head of trade policy at the BCC, cautioned against campaigning to rejoin the EU, saying: “Debates about rejoining the EU or a customs union are not currently helpful. Firms tell us they want more trade with Europe, the US and Asia.”
Bain added: “They don’t want to keep retreading old ground but look forward instead. Rejoining would compromise the trade deals we have made since leaving and cut our advantages in areas such as AI where our regulatory approach differs.”