Return to EU is no silver bullet for UK business

Ten years on from the Brexit vote, those looking longingly at the continent in the hope of economic quick wins should be cautious over the uncertainty, cost and control implications.

In this exclusive column, The Telegraph's economics editor, Szu Ping Chan, argues:

● Full EU membership talks would take years, not months, given the bloc's historically slow-moving accession process

● Rejoining would mean paying to play, with Britain likely to face a tough negotiating stance rather than a warm welcome

● Closer regulatory alignment carries real short-term costs for business, even where the long-term trade case is strong

● The bigger priority should be fixing Britain's home-grown talent pipeline, especially tackling youth unemployment

More Europe: that seems to be Downing Street's answer to many things these days. Britain's economy is struggling to find its feet in a world with wars to our east and plenty of uncertainty to the west. The hunt for silver bullets is on, and prior to his resignation, Keir Starmer said closer ties with our nearest neighbours were in the national interest.

He wasn't alone in this view. Rachel Reeves has championed better alignment with the European Union as a solution to growth, whilst former health secretary Wes Streeting went even further by saying that Britain should rejoin the union, branding Brexit a “catastrophic mistake”.

Whether this trajectory remains in government under new leadership remains to be seen. Andy Burnham, who is highly likely to be Starmer's successor, has previously said he would like to see the UK rejoin the EU within his lifetime, but confirmed in the run-up to the Makerfield by-election that this would now not be a priority for him.

It's been a decade since Britain voted to leave the EU. But six prime ministers – at the time of writing – and three general elections later, the post-mortem is still incomplete. Reeves liked to cite studies that show the UK economy is up to eight per cent smaller than it would have been if Brexit had not occurred, and a range of businesses looking back across the decade have told Business Leader it's been little but pain.

The drag on growth may have been slow burn, rather than a sudden shock, but it has hurt. Brexit has also resulted in talent being sucked from Britain's fastest-growing companies, while doing business with our nearest trading partners has undoubtedly become much harder.

Why fully rejoining the EU would be a mistake

Even so, this is not the time to reopen old wounds. Of course, we should seek closer ties, but not at any price. And fully rejoining the EU would be a nightmare. Here are three reasons why.

The first is time. It's just not in the EU's DNA to move quickly unless forced by crisis or war. Any UK attempt to rejoin would require more painful negotiations, which would take several years, not months.

Take Croatia. The EU's newest member applied for membership in 2003. Negotiations began two years later, and Croatia only joined the bloc in 2013. That decade-long process involved detailed scrutiny, negotiation and legal alignment. Any idea that negotiators on both sides could just dust off the old UK-EU arrangement and implement it overnight is wishful thinking.

Any old arrangements would be torn up. The terms would be uncertain, negotiations prolonged, and the final settlement unpredictable. Nothing would be quick, clean, or guaranteed – and businesses hate such uncertainty.

The cost of money and control

The second issue is the thorny question of money. Any move towards closer integration will involve paying to play. You might think that's only fair, but I always remember what a top trade negotiator once told me: countries don't have friends, they have interests. Far from rolling out the red carpet, Britain should expect a rough ride.

But the third and biggest issue of all is the one of control. The indirect costs of alignment with the EU will be substantial; we've just spent the best part of a decade trying to untangle ourselves from them. Take the current negotiations over aligning British food standards with the bloc.

With a lot of our food headed across the English Channel and vice versa, it makes sense to seek closer alignment. But this is not cost-free, and industry groups have warned of short-term disruption as companies implement new inspection systems, retrain staff again and switch labels. These are real costs that businesses would feel immediately, even if long-term trade is smoother.

There's also the issue of EU regulation – and no, this isn't about bendy bananas or noisy vacuum cleaners. There's a reason why all the major technology giants are American. Leaving aside the fact that pools of cash are more plentiful across the pond, companies are encouraged to flourish rather than being treated with suspicion.

Even Darren Jones, Starmer's right-hand man, recognised that Brussels' decision to treat tech giants with an iron fist is the wrong approach. At a recent dinner, he dismissed the claim that rejoining would be a panacea: “The EU's approach to regulation and technology is not right, and so even though we've lost a lot of GDP as a consequence of Brexit, we shouldn't take the lazy answer of just saying we should just rejoin the EU. I do think we would lose some competitive advantage if we did so.”

Focus on home-grown strengths

So, what should we be doing instead? Focusing on our home-grown strengths and fixing the pipeline for the future, especially for young people trying to enter the world of work. The UK youth unemployment problem is close to a full-blown crisis.

Policymakers must return to first principles of making education worth it and making work pay. Of course, we should do more business with our nearest neighbours, but we must look forward rather than back. The next decade should be spent building Britain's future, not relitigating its past.