Will the UK rejoin the EU under Labour?

On Thursday, July 4th, the United Kingdom will face what’s likely going to be a historic election. For the first time since 2010, the conservative Tory Party will most likely lose a general election, handing power over to the opposing Labour Party.

Pre-election polls show the Labour Party will win by a landslide. A July 3rd Politico poll shows a 40% preference for the Labour Party, with the Tories plummeting at 22%. According to The Guardian, the situation is so abysmal that current Prime Minister Rishi Sunak risks losing in his own prefecture in the Yorkshire region. If that were to happen, Rishi Sunak would be the first incumbent PM to lose his seat in parliament in British history.

It wouldn’t be the first record broken by Tories during their 14-year tenure. Former Prime Minister Liz Truss, Sunak’s predecessor, had the shortest tenure in British history at just 44 days. She resigned in disgrace after her horrific tax cut plan nearly collapsed the UK’s economy and pushed the value of the pound to historic lows.

But perhaps the Tories will be most remembered for the 2016 Brexit Referendum. Proposed by former PM David Cameron, it started the gruelling separation process of the United Kingdom from the European Union.

Eight years after the referendum, most British people widely regret their decision. Polls indicate that 55% of British citizens think that the decision to leave the EU was incorrect, while only 33% believe it was the right choice.

So, with a new leadership looking sure to rule the country for the foreseeable future, will the UK rejoin the European Union? To understand that, we first need to understand why Brexit happened and what it caused.

Why did Brexit happen?

The history leading up to the 2016 referendum dates back 8 years to the 2008 financial crisis, greatly impacting the United Kingdom and the rest of the world.

The wave of unemployment and recession that followed led the ruling Tory Party to implement harsh austerity policies. The Cameron cabinet cut funding to every level of the welfare system trying to reduce public debt and fix the UK’s finances.

Austerity, which never really stopped except for the pandemic years, caused household income to plummet. It disproportionally hit low-income households, the ones relying most on the welfare system. In turn, this increased inequality and frustration among the general population.

Austerity has not stopped with Brexit with only marginal gains during COVID.

Source: BBC News

Capitalizing on the general discontent, some extreme right wings of the UK economy started blaming the European Union for austerity. As the second-largest economy in the EU, the United Kingdom was a net contributor to the bloc’s budget, amounting to hundreds of billions of euros every year.

Tories also blamed EU regulations for strangling British businesses and pointed to increasing immigration for the rising unemployment.

David Cameron, however, believed anti-EU sentiment was simply a fringe movement with no real traction. To prove it, Cameron called the Brexit referendum with absolute certainty his “Remain” campaign would win.

History, however, proved otherwise. “Leave” won by an extremely thin margin, and the United Kingdom started its process of abandoning the European Union.

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The effects of Brexit

The main talking points of the “Leave” campaign were independence from EU regulation, less immigration, and an increased budget for public services. Eight years after the vote, it’s clear all of these promises were completely misleading and, in some cases, plain wrong.

With Brexit, British businesses were subject to more regulations instead. British businesses used to export goods easily in the EU free trade market, but now face excessive red tape. This caused many UK firms to relocate to the continent, often choosing Amsterdam or Paris as their new headquarters. The number of new businesses created in the UK after 2016 plummeted.

British businesses have not kept up with their EU peers after Brexit.

Source: NimbleFins

Moreover, the “Leave” campaign promised increased trade with non-EU partners, which has not materialised. Most of the post-Brexit trade deals negotiated by the UK already existed under the EU framework. The new Australia and New Zealand open trade deals added an estimated 0.08% and 0.03% to the UK annual GDP. By comparison, leaving the EU caused an estimated 4% of GDP loss every year since 2020.

Immigration after Brexit also went up rather than down. In fact, skilled immigrants from the EU decreased, but immigration from non-EU countries (which would have happened with or without Brexit) skyrocketed. In 2023, overall immigration in the UK peaked at 722,000 new arrivals, up from 332,000 recorded in 2019.

Non-EU immigration in the UK increased after Brexit

Source: The Economist

However, the lack of skilled immigrants from the EU (92,000 in 2019 down from 190,000 in 2016) caused a severe unemployment crisis. Combined with the pandemic and the Ukraine war, the UK had the slowest post-COVID recovery and the highest inflation among G7 members.

With collapsing trade, GDP, and capital formation, being left alone in the COVID and Ukraine crises, the UK lacked the economic momentum to boost its budget. As a result, more austerity measures have been implemented, creating even more inequality and discontent.

"Doppelganger Britain" is an estimate of the UK’s performance had it remained in the EU

Source: The Economist

Will Labour rejoin the EU?

Given the disastrous effects of Brexit on the UK economy, it would be safe to assume the new Labour leadership would push for rejoining the EU.

However, Labour leader Keir Starmer has been very clear he doesn’t want to rejoin the European Union in any way, shape, or form. “I’ve been really clear about not rejoining the EU, the single market or the customs union or a return to freedom of movement,” Starmer told the Financial Times.

That puts Starmer at odds with the vast majority of his supporters. According to a poll by the UK In a Changing Europe (UKICE), 78% of Labour voters want to rejoin the European Union.

Although several Conservative voters regret Brexit too, Starmer’s bet is likely to position his party more at the centre ahead of elections. Historically, British voters are much closer to the Tory party: since WWII, only 11 out of 30 British PMs were Labour members.

Starmer may be right to be more cautious in these elections, perhaps taking a slower rapprochement to the EU rather than rejoining right away. He may decide on a total reunification if Labour wins the next 2029 general elections.

Closer ties with the EU are what the Tory Party wants as well. Gone are the days of “Brexit means Brexit” slogans, as the disaster it caused is clear for everyone to see. Sunak himself opened back relations with Brussels, reentering the Horizon EU science program.

“I think what is already happening now will continue. Britain is back in Horizon; tomorrow maybe Erasmus, and after tomorrow the customs union, defence and so on and so on,” European MP Guy Verhofstadt said.

“And then later on maybe people will ask themselves, why are we not in there? Because we are following these rules, and maybe it’s better that we have a say about what these rules are.”

So, to answer the original question, the UK will not rejoin the EU under the Labour Party. Most likely, however, it will start a slow and steady process of rapprochement that could lead the UK back into the bloc several years in the future.