A GDP boost of at least £92bn would supercharge the UK economy - equivalent to an increase of up to 3.6% - via UK’s re-entry to the European Union (EU), new independent econometric research modelling the key benefits of membership has suggested.
The study was commissioned by Best for Britain and carried out by Frontier Economics researchers. The report assesses the impact of closer UK-EU integration scenarios on the UK and the EU’s economies, and the effect of US tariffs being imposed by Donald Trump.
The research suggests that the UK could benefit from a significant growth increase (at least 2.5% to 3.6%) over 5-10 years by pursuing deeper integration with the EU - and that closer ties including if we were to “accede to membership” would move the needle even further. The resulting economic impact vastly eclipses any other options, the model suggests, making the GDP boost from a food and drink deal, or a customs union, look miniscule in comparison. It would far outweigh, by 10 times, the economic impact of agreeing an agrifood (SPS) deal with the EU, which projects only a very minor impact on growth (0.2% to 0.3%) - as a conservative estimate.
In the long-run, the UK government estimates that all the UK’s post-Brexit trade deals combined could increase GDP by £15bn (or half a percentage point). The report’s findings suggest that membership of the EU alone would deliver at least six times more growth (£92bn), over a similar timeframe. The proceeds of this growth could go towards vital public services investment - including financing the defence spending shortfall many times over.
Similarly, pursuing a policy of more liberalised rules of origin - meaning the criteria for a product’s ‘national source’ - or deeper regulatory alignment with the EU would only deliver a fraction (0.5% to 0.7% and 1.5% to 2.1% respectively) of the growth on offer from the more ambitious approach of combining the two. This would also have a cumulative, or snowballing, economic impact, meaning its combined effect would be “greater than the sum of the individual scenarios taken separately”, the Frontier report states.
Crucially, reinstating the UK’s EU membership and the resulting economic upswing could recoup at least two-thirds and up to 90% of the economic loss wreaked by Brexit by capturing a substantial proportion of the benefits of EU membership - but not just for wealthier areas of the UK, this conservative estimate found. These gains, according to the Frontier Economics study, would be felt most strongly - outside of London - in the East and West Midlands, Yorkshire and the North East - Britain’s former industrial and manufacturing heartlands - due to an outsized boost to trade in goods.
It also isn’t just the UK that reaps the benefits. In cash terms, modelling the key benefits of the UK’s membership delivers a similar level of export growth for the EU ($48.4bn) as for the UK (£43bn), offering mutual benefit to the continent as a whole. Additionally, in the modelled scenario of US tariffs being applied, the report states that deeper integration (combining regulatory alignment with liberalised rules of origin) “would practically neutralise the effects of US tariffs” suggesting such an approach would be a “worthwhile risk mitigation strategy” for the EU, under a chaotic Donald Trump administration. Deep integration with the EU also offers the UK “robust safeguards” from US tariffs, especially regions outside of London.
Meanwhile, increasing trade friction between the UK and EU economies, or even scrapping our current deal with the bloc entirely, as Reform UK threatens to do, risks making the UK notably poorer. Annual exports could drop by as much as £16bn, while the long-run impact on growth could see a GDP hit of as much as £35bn.
Frontier Economics’ modelling, which applies maths and statistical modelling to economics, also suggests that membership of the EU could - prudently - deliver 24 times the GDP growth of the India free trade deal, which the government estimates could increase GDP by a mere 0.13%. Moreover, were the UK to reinstate its membership of the EU, in just five to ten years time, the economy could benefit from 150% of the growth that a third runway at Heathrow Airport could deliver over six decades.
Campaigners are now urging the government to commit to signalling the UK’s intent to accede to EU membership to boost economic growth across the UK, shield us from Trump’s hostile and chaotic tariff policy, and fund our vital public services relied on to keep Brits safe and healthy.
Naomi Smith, Chief Executive of Best for Britain, said:
“We are a nation bursting with innovation, creativity, and ambitious for the future, but for the UK to chart a new course in the decades ahead, we need the economic jet fuel to get us there, and this timely research provides exactly that vital lift-off.
“When it comes to generating growth on the vast scale required for politicians to deliver on the changes the public are crying out for, the economic heft of re-joining the EU is in a league all of its own, with no other policy lever even coming close.”
Paul Johnson, former director of the Institute of Fiscal Studies (IFS), said:
“A decade on from 2016’s Brexit referendum it is clear that the UK leaving the EU has damaged our economy and left us increasingly exposed to global shocks. The people of Britain are poorer than they need have been.
“As this report shows, if we want to recover as many of those costs as possible, then we need to target not further divergence but deeper integration with our closest and biggest market.”
Paul Drechsler CBE, former chairman of the International Chambers of Commerce (ICC) and former President of the Confederation of British Industry (CBI), said:
"For nearly a decade, British businesses have paid the price of higher costs, diminished export opportunities and investment that has quietly chosen other countries. We should not be surprised productivity has stalled, growth has disappointed and living standards have suffered.
"The evidence is now overwhelming: the UK’s economic interest lies in rebuilding a far closer relationship with the European Union - reducing friction, restoring competitiveness and making Britain a more attractive place in which to invest, trade and grow."