Andy Burnham faces a “big gamble” to reverse the damage of Brexit inflicted on London, says a leading expert.
Charles Grant, Director of the Centre for European Reform, stressed that to signicantly undo the harm to the capital of quitting the EU the new Prime Minister would have to take Britain back into the Single Market or fully back into the European bloc.
“It would be a big gamble, but he seems to be someone who is willing to take risks. So I think there's a chance,” he told The Standard.
At Labour’s annual conference in Liverpool, Mr Burnham raised the prospect of reversing Brexit and returning to the European Union.
The Prime Minister said Brexit had done “more harm than good,” promising to set out the options for future ties with the Continent around the time of a UK-EU summit later this year.
Mr Grant told how the benefits for London, and the wider UK, of going back into the Single Market, or similar ties with the EU, would likely include:
“ An “economic boom” boosting tax revenues for the Treasury as the economy grows quickly and this in turn could lead to tax cuts for millions of people and businesses
* A return of some of the bankers, including from US banks, who were part of a Brexit “exodus” from the City to other financial centres
* A jump in investment into London and other regions
* A new “buzz” in London as more European workers head to the city
* Coffee shops and other businesses finding it easier to recruit staff
* Billions more in Government coffers to spend on improving public services such as schools and hospitals
* Britain regaining political clout on the global stage
London Mayor Lord Sadiq Khan is leading the charge for the UK to rejoin the EU, given the clear benefits of such a move for the capital which voted 60/40 to Remain.
The UK’s economic watchdog, the Office for Budget Responsibility, says splintering away from the European Union has wiped billions off the economy.
Mr Grant explained how Britain’s GDP had taken a hit of between 5% and 8% from Brexit.
“That means everybody is paying more tax. There's less money for public spending,” he said.
“If you rejoin the European Union, there'll be an economic boom.”
Specifically on the City, he told how there had been a “bit of an exodus” due to Brexit, particularly linked to European trades, but not on the scale as feared.
“Quite a lot of American investment banks shifted people from London to Paris, Amsterdam, Dublin, Frankfurt and other European financial centres,” he said.
“So some of those jobs would probably come back.”
Rejoining the Customs Union would benefit the North and the Midlands, he explained, as it would boost trade in manufactured and other goods.
But the far bigger economic prize would be a return to the Single Market, for example through a Norway-style model, which is likely to include a return to freedom of movement of workers.
However, this would also probably mean Britain having to be a rule taker, accepting directives from Brussels with limited or no say over them.
Such an arrangement would be politically difficult to persuade the country to adopt.
But the Government is already seeking to rebuild ties with the European bloc, including through a youth mobility scheme which could help London’s coffee shops and other business recruit workers.
A move to rejoin the Single Market would significantly increase this labour force.
Mr Grant added: “It'll be more of a buzz in London because probably more people coming in from EU countries.”
The City of London Corporation backed Mr Burnham’s move towards closer EU ties, stressing the need for a greater focus on regulatory cooperation and market access including mutual recognition of professional qualifications, extending adequacy arrangements, and bringing down barriers to investment in defence, tech and net-zero.
