Sir Keir Starmer’s promise to seek a closer trading relationship with the EU and an improvement of the Brexit deal (“UK opposition leader pledges rewrite of Brexit trade deal”, Report, September 18) is a welcome sign of a more constructive approach towards the UK’s closest neighbours.
But in rejecting out of hand any sort of return to the single market or the customs union, he fails, like the Brexiters, to acknowledge (or realise) how deeply the UK was, and for the moment still is, integrated with the economies of the EU. This is not just a matter of exchanging finished goods but of being part of a highly specialised pan-European division of labour where practically every enterprise obtains some components for its products from other countries in the single market.
Behind this development is Adam Smith’s argument that the division of labour increases with the extent of the market and American economist Allyn Abbott Young’s 1928 extension that the same process generates economies of scale, especially for intermediate products. This has been a long evolutionary process, accompanied early on by agreements on technical and other standards — the International Electrotechnical Commission, for example, was founded in 1906, in London — and these were an important factor leading to the creation of the EU, not just a consequence of it.
Withdrawing from such a complex, interdependent system is more like pulling up a tree by the roots than leaving a gentleman’s club. Moreover, it is difficult to see the UK replacing the EU market on a similar scale.
Intra-regional transactions in world trade have risen strongly since the mid-1980s as other country groups follow a similar evolution to that of the EU. Without a clear prospect of reintegrating with the EU, the UK risks becoming a backwater of Adam Smith’s regional economy.
Paul Rayment
Former Director of Economic Analysis
UN Economic Commission for Europe
London SW1, UK
