Operation Blame Brexit is a failing strategy

Rachel Reeves needs a scapegoat before her budget next month. With tax rises and spending cuts looming – perhaps even a few manifesto-breakers – the Chancellor is desperate to find someone, or something, to blame for the mess, rather than admit to Labour’s own missteps.

They have already tried over-egging a £22bn black hole and laying it at the Tories’ door. So what is Reeves casting back to now? The B-word. There is no clearer signal of a Government with no economic story than one trying to come up with an excuse that voters will see straight through.

Addressing business leaders in Saudi Arabia yesterday, Reeves conceded that the Office for Budgetary Responsibility (OBR) was “likely to downgrade productivity” which has been “very poor since the financial crisis and Brexit”. Any OBR downgraded forecasts, Reeves claimed last week, should be blamed on Brexit: “That is why we are unashamedly rebuilding our relations with the EU to reduce some of those costs.” Our exit deal, she has said, “compounded” productivity problems.

The OBR’s most recent estimate – one Reeves was quick to cite – suggests the 2020 Brexit trade deal will “reduce long-run productivity” by four per cent compared with staying in the EU. It’s not up to date as it is based on academic studies conducted between 2016 and 2019. The problem that is up to date – one that is at the heart of Reeves’ fiscal challenge – is that reports are now coming out that the OBR is understood to have downgraded the UK’s productivity level ahead of her budget, adding £20bn to the hole in public finances.

It is worth remembering that at Reeves’ last budget, where she delivered a record £40bn of tax rises, the Chancellor pledged not to come back for more. To do exactly that – and then blame an event nearly a decade old – is to take voters for fools. It will not wash to say Brexit has caused the downgrade. It is not a newly discovered factor, its effects are not revelatory to this budget. If the Chancellor wants to raid taxpayers again, the least she could offer is a little candour.

Economists, even Remain-supporting ones, warn blaming Brexit for today’s economic woes is misleading. Strong analysis from The Times summed it up rather nicely: “Ministers may be tempted to cast Brexit as a fresh excuse for tax rises. In reality, as the economy adjusts, the Brexit effect is fading, not deepening.”

If Labour would like to argue so vociferously about the great harm Brexit has done to the economy, might they look to do anything about it? Of course not. According to their thinking, the problem is Brexit – but they’re not going to reverse it. Unable to move on, and unwilling to look back.

It will take a forward looking, intellectually sufficient narrative and diagnosis to win these arguments and make tough political decisions for a good economic future. Labour seem unable to provide one; the Tories are trying. Sir Keir Starmer at PMQs last week gave free publicity to the Party’s ‘golden economic rule’ where half of each pound saved would be spent bringing down the deficit, with the other half going on growth-boosting measures such as tax cuts – and the Tories have already identified £47bn in spending cuts. There is a vision to secure the future rather than load the weight onto different sectors in some horrid ‘Buckaroo’ game where the donkeys are left overworked, undersupplied and kicking-out.

Away from its inherent flaws, Labour’s new approach just feels so dreary. I thought we had all agreed that our political arguments had moved beyond that fateful day on 23rd June 2016. When I was just a budding hack, I wrote about how we needed to have new political arguments – even that was five years ago. But we are moving backwards because of a backwards looking Labour government; one that is taking a cowardly, negative strategy that does not stand up to scrutiny. 

If they want to rehash Brexit, best of luck to them. It may help Labour shore some of their disillusioned progressive flank but, as pollster Luke Tryl has made clear, there will be a penalty for whomever is seen to bring Brexit rows back. Bringing it back for tax rises, I’m sure, will provide just the reward the government were looking for.