UK Finance Minister Rachel Reeves has stressed at the International Monetary Fund that Britain’s 2020 exit from the European Union has had a long-term impact on the country’s economy, writes the BBC.
The minister, meeting with the world’s leading finance ministers and bankers, said that the UK was challenged by the way it left the EU. She referred to the assessment of the Office for Budget Responsibility (OBR), and said that Britain recognizes the consequences and is looking for opportunities to strengthen trade ties.
The Labour Party has so far been reluctant to acknowledge the negative impact of Brexit on the economy, but since the party conference in September, ministers have been talking about it more and more loudly. The use of such an argument at the highest level of international economics is not surprising, and marks a change in domestic policy.
The impact of Brexit is expected to be one of the arguments in the upcoming negotiations on the 2026 budget.
The need for new measures, probably including tax increases, will play a significant role in the budget negotiations.
The OBR is expected to provide a detailed assessment of the decline in British productivity, and the impact of Brexit will also be discussed. Economists have pointed to the decline in investment that followed the uncertainty caused by the referendum, as well as the poor performance of trade.
The issue is currently very sensitive, and the government is trying to decide on positions in negotiations on changing the terms of Brexit, which will also include abandoning inspections of food and agricultural products introduced after leaving the EU, as well as helping British industry to join a consortium that would allow it to participate in European defense procurement. European ministers have enthusiastically called for joining the talks to reduce the impact of global trade wars.
Reeves announced a 40 billion pound tax hike, including payroll taxes, in her first budget last year, and insisted she would not repeat it in future years. But it is now clear that the minister will have to make further adjustments.
The Conservative Party has spoken at its conference about drawing a clear line, pledging to cut public spending. This is planned to be done by cutting welfare, public services and foreign aid budgets by 47 billion pounds if the party wins the next election.
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