Labour's £40bn black hole 'the same as Brexit costs UK annually', figures show

THE Labour Government is facing pressure to be “honest” about the impact of Brexit ahead of their first Budget – after a minister admitted that more had been spent withdrawing from the EU than the “black hole” in the UK’s finances.

In response to a written question from SNP MP and international affairs spokesperson Stephen Gethins, Labour Treasury Minister Tulip Siddiq admitted that the UK had spent an estimated £23.8 billion as part of the EU financial settlement by December 2023, with a further £6.4bn estimated left to be paid.

Siddiq further conceded that the UK Government has “no overall estimate of the impact of the UK’s exit from the EU on public finances”.

The figures have been highlighted by the SNP, who pointed to a study by the Centre for European Reform which in 2022 found that the UK Government’s annual tax revenues would be around £40bn higher without Brexit.

Gethins noted that this is “almost the exact amount the Chancellor is planning to cut,” according to reports ahead of the Budget on October 30.

The Financial Times, which first reported the £40bn figure, said it was seeing the Labour leadership prepare “the ground for massive tax increases, large spending cuts, or more likely both”.

Chancellor Rachel Reeves is expected to deliver cuts and tax rises in her first BudgetThe SNP further highlighted figures from the Office for Budget Responsibility (OBR), which estimated that the UK’s long-run productivity would be four per cent lower than if it had remained in the EU.

In an update from May, the OBR also estimated: “Both exports and imports will be around 15 per cent lower in the long run than if the UK had remained in the EU.”

Commenting on the figures, SNP international affairs spokesperson Gethins said: "With the Labour Government planning £40bn of painful austerity cuts and tax rises at the UK Budget, it's essential that they are honest about the damage Brexit is doing to public finances.

SNP MP Stephen Gethins called out Labour for pushing a 'hard Tory Brexit' (Image: BBC) "Sir Keir Starmer has blamed the Tories for the state of the economy but at the same time he's continuing Brexit, their most damaging policy, which is wiping billions of pounds from tax receipts and economic growth every single year.”

Gethins called for Labour to “commission and publish a full assessment of the impact Brexit is having on the economy and public finances ahead of the UK budget – and be honest with voters about the impact their hard Brexit policy choices are having”.

He went on: "Brexit has been disastrous for the UK economy and broader society. It takes away rights and opportunities that my generation took for granted, makes it more difficult for businesses, and we are paying heavily for the privilege of being outside the world’s largest single market.

“There is no path to strong economic success outside the EU. Given this, it astonishes me that Sir Keir is pursuing a hard Tory Brexit that deprives public services of badly needed funds at a time when Labour continue to pursue a Tory austerity agenda."

The UK Government was approached for comment.