Rejoining the European Union could add up to 6 per cent to UK output over the long run, according to analysis by Goldman Sachs, which said maintaining the existing Brexit arrangement would yield “limited benefits” to the economy.
In a note to clients released on Tuesday, the US investment bank set out a number of routes Andy Burnham, the prime minister, could pursue to improve relations with the EU, and estimated how much each would benefit the UK economy.
Under the free trade agreement between the UK and the EU, which came into force in 2021, Britain is set to receive a GDP uplift of only 0.3 per cent, Goldman said. Forming a customs union would yield a further 1 per cent of GDP, and rejoining the single market could raise output by as much as 5 per cent.
The bank said the largest improvement would come from the UK rejoining the EU, with an overall boost of up to 6 per cent over the “long-run”.
Goldman’s analysts wrote: “The UK’s economic performance has deteriorated significantly relative to its peers since the 2016 referendum, with GDP now around 6 per cent below its counterfactual path. The economic upside from closer relations could therefore be material.”
The note follows a Commons statement on Monday in which Burnham said his government would engage in “serious dialogue” with the EU over the UK’s future place in Europe and described the current relationship as “not good enough”.
“Sticking with the status quo is not good enough for Britain,” he told MPs, according to AFP. “Worse, it would be a major dereliction of duty to turn away.”
Burnham confirmed that the second UK-EU summit will take place in Brussels on 20 November. Downing Street said he would use the meeting to push for deals to cut costs and red tape for British farmers and businesses, and that leaders would agree next steps on lowering costs for farmers and food businesses.
“A threadbare Brexit deal has damaged our economy,” Burnham said in a statement issued by Downing Street.
He told MPs that the immediate priority was securing a successful outcome at the summit, after which he wanted “a serious dialogue about the different options for our relationship in the long term”, AFP reported. The news agency said he stressed that he was not proposing a new EU referendum. He has previously said that another EU referendum is “possible” in a Labour election manifesto.
Burnham is currently bound by Labour’s 2024 election manifesto, which ruled out joining a customs union, going back into the single market or allowing the return of freedom of movement with the EU, according to AFP.
In a podcast interview with Alastair Campbell and Rory Stewart for The Rest Is Politics: Leading, Burnham said he would argue for closer integration with the EU at the summit. He said sector agreements, such as one on agri-foods, could add “fractions of percentage points” to UK growth.
On 30 September he told BBC Radio 4’s Today programme that the options for the long-term relationship ranged from staying as the UK is, through a customs union or the single market, to rejoining. “Or we could go all the way,” he said. Downing Street officials have since been testing public support for rejoining the EU with thinktanks and pollsters, the Guardian has reported.
Opposition parties have accused Burnham of trying to betray the Brexit vote, AFP reported. Alex Burghart, the Conservative deputy leader, said: “Labour cannot blame a democratic vote from over a decade ago for the consequences of their own economic decisions.”
Jonathan Reynolds, the business secretary, told the Guardian this week that the free trade agreement he helped strike with India in 2025 would become defunct if Britain rejoined the EU. “Obviously, if you enter those arrangements, you are doing things collectively,” he said.
