“The cost-of-living crisis requires a grown-up conversation about our future trading relationship with our nearest neighbours.”
Labour won’t dare speak the truth: we must re-join the single market to help our economy, writes Adam Price
This article was published in Wales Online 17/06/2022
Let’s not beat around the bush. Brexit is failing Wales.
I agree with Labour shadow minister Anna McMorrin who said this week that she hopes we can get back into the single market and customs union. The Welsh economy’s prospects are diminishing – our businesses struggling with the burdensome paperwork and extra costs and forced to pay more taxes due to the Brexit shaped hole in Treasury coffers.
Labour First Minister Mark Drakeford seemed to agree with me too, when in FMQs this week I raised the obvious solution to help thousands of families struggling with the cost-of-living crisis – that is to boost trade and opportunities by re-joining the single market and customs union.
Labour’s leader, Keir Starmer. dare not speak the obvious truth, muzzling his shadow minister for daring to break the party line. We’re told that we’ve got Brexit done and there’s no going back.
Six years since the referendum – there’s no use in fighting old battles. But the cost-of-living crisis requires a grown-up conversation about our future trading relationship with our nearest neighbours. Leaving the single market and customs union is costing the UK billions in lost trade and tax revenues.
The OBR (Office for Budget Responsibility) forecasts that both exports and imports will be around 15% lower in the long run than if the UK remained in the EU and have also concluded that new trade deals with non-EU countries will not have a material impact. A long-term ramification is that the UK appears to become a less trade intensive economy, with trade as a share of GDP falling 12% since 2019, two and a half times more than in any other G7 country.
When the UK catches a cold, Wales catches pneumonia. Our greater dependency on trade with the EU means our economy suffers more from the economic slump associated with the new barriers.
For Wales, nearly 60% of our 2021 exports are to the EU compared with 49.2% for the UK. Stena Lines have confirmed that Welsh ports (Holyhead, Fishguard and Pembroke) have suffered from a 30% decline in freight volumes.
Border checks and the subsequent delays have brought with them their own costs. UK food producers have calculated that the extra paperwork has increased twelve-fold, at a cost of £60 million a year.
Despite Westminster’s grandstanding about trade opportunities and ‘Global Britain’, the economic and geopolitical reality is that more of our trade is always going to be with our neighbours - yet Westminster’s trade barriers are adding costs to that trade.
Boris Johnson has no interest in forging a better path. The Prime Minister is instead on a war path with the EU over the Northern Ireland Protocol. This is despite it being one of only two regional economies where GDP exceeded pre-pandemic levels in first quarter, thanks to its access to the single market.
The only other UK region cushioned from the worst impacts of the exit from the EU single market is London. The economist Jonathan Portes has been quoted as saying that “London’s economic dominance, and hence regional and geographical inequality, has, if anything, been further exacerbated by Brexit.”
No, not levelling up, but levelling down. With an energy cap rise of 54%, a rise in inflation, and with a backdrop of stagnant wages, few will be immune to the cost-of-living crisis.
Yet Westminster is now risking a trade war, which will not only plunge Northern Ireland into political uncertainty but also add further to the economic pain these families are already experiencing in Britain too.
Given the urgency of the cost-of-living crisis and the challenges we’re facing in every sector of the economy, we deserve the very simple, practical solution that’s available to us. A principle that is at the heart of ‘Securing Wales’ Future’, the White Paper published jointly between Plaid Cymru and the Welsh Government in 2017.
A principle that does not mean undermining the 2016 referendum vote but does mean enabling the UK to once again trade with our nearest neighbours and reap the same benefits as Northern Ireland.
Too many people in Wales have already reached crisis point. Last winter, four in ten Welsh households didn’t have enough money to buy anything beyond everyday items. Since then, we’ve had an energy price cap increase, and seen a rise in both national insurance and council tax and are expecting another energy price cap rise in October.
As winter draws in, we shouldn’t be waiting to see how many families will no longer be able to afford even everyday items. We should not allow the UK to catch even the metaphorical cold and we certainly should not be testing to see whether Wales catches pneumonia.
It’s clear that a future UK Government under Keir Starmer would be just as committed to a Tory trade policy that is hampering our economy.
Honesty in politics is a virtue that the Leader of the Opposition holds dear. It’s a time he applies that virtue to the cost-of-living crisis and make the positive case for the single market and customs union.