The UK’s ruling Labor Party will almost certainly elect new leadership to replace the highly unpopular British Prime Minister Keir Starmer in the coming weeks. But the prospect has not encouraged hopes of political or economic renewal. There is consensus in the British media and, more importantly, in global financial markets that any changes to the policies of the failed Starmer government will only make things worse. It reminds us of the question asked by the ultra-conservative Victorian prime minister, Lord Salisbury: “Change? Change? Aren’t things bad enough already?
But there are good reasons to believe that the consensus is wrong. For a start, all of Starmer’s potential successors now explicitly recognize that increasing economic growth is a condition not only for fiscal solvency, but also for Labour’s political survival. Secondly, all candidates implicitly understand (although they do not openly admit it) that Labour’s inability to boost economic growth was already predetermined by an original sin of Starmer’s 2024 campaign.
Starmer promised to transform the poor economic situation created by fourteen years of failed Conservative governments, but without abandoning any of those governments’ most macroeconomically significant policies. Specifically, Starmer’s electoral program included two absurd commitments that left him with no chance of improving British economic performance: the promise to cling to unrealistic fiscal forecasts, without a general increase in taxes; and respect the conservatives’ “red lines” regarding the country’s relationship with Europe after Brexit.
Since fiscal austerity and Brexit were the main causes of the economic and political malaise that Labor promised to remedy, Starmer was doomed to failure. To be successful, his successor must abandon one or both of the above commitments. Perhaps the option of discarding the “red lines” drawn by the conservatives regarding Europe is more attractive than a general tax increase. An economic rapprochement with Europe would give an immediate boost to the British economy and domestic political support for the new government.
On this tenth anniversary of the Brexit referendum, the economic costs of leaving the European Union are already too evident to be denied. Reliable estimates of damage range from a low of 1% to a catastrophic 8% drop in GDP. Even the most convinced Brexiteers no longer doubt it, although they insist that the relative sufferings are “a price worth paying” to restore national sovereignty.
In any case, a policy of rapprochement with Europe can benefit the next government even more than a favorable economic situation. According to the latest polls, 57% of voters now believe that leaving the EU was a mistake; In the opinion of the country’s most respected electoral analyst, John Curtice, this amounts to a “decisive and systematic rejection of Brexit.”
Furthermore, the disappointment is not only economic. Brexit did not fulfill the promises of its defenders. Instead of declining, net immigration almost doubled (from 240,000 people in 2016 to 431,000 in 2024), and the number of non-European immigrants (attracted by families and employers, including the government itself) far exceeded the expulsion of EU citizens.
The change in attitudes towards Europe has also received a strong boost from a demographic transformation that will continue to erode support for Brexit. It is estimated that since the 2016 referendum, three million elderly voters (main base of support for Brexit) have died and 2.5 million young voters (mostly opposed to Brexit) have joined the rolls, to whom 16-year-olds will be added starting in the next elections.
Even more politically important for the new government will be the tactical arguments in favor of a change in the relationship with the EU. As any genuine restart of the bilateral relationship will require negotiations that will extend well beyond the next general election (scheduled for August 2029 at the latest), the new government can, technically, maintain during this term the campaign promises that Labor made in 2024 and at the same time prepare the cancellation of the “red lines” of previous governments. The process could begin with a serious debate about the UK’s European future, including taboo topics such as the free movement of people and a possible return to full EU membership.
The mere announcement of similar changes after the 2029 elections would be transformative. Economically, the possibility of a return to the European single market would give a major boost to business confidence and revive investor interest in British assets, including government securities. And on a political level, it would offer a unifying vision to progressive and internationalist voters who are today divided between Labour, the Greens and the Liberal Democrats.
This tripartite division of the left was a blessing for Nigel Farage’s far-right Reform UK party, which with 30% of voters (made up mainly of hard-core Brexiteers and anti-immigration voters) swept the local elections, thanks to the British single-member simple majority electoral system. With 83% of Labor voters, 84% of Liberal Democrats and 82% of Greens saying they would like to reverse Brexit, Europe is the only credible issue that can mobilize a “tactical vote” from the majority of British voters: supporting the pro-European candidate most likely to defeat the Conservatives and Reform UK in each constituency.
According to recent Ipsos analysis, a commitment to holding a referendum on rejoining the EU would increase the percentage of voters willing to consider a vote for Labor from 31% to 45%, and reduce the percentage of those unwilling from 62% to 43%. It would also “improve Labour’s appeal among supporters of all other parties”, by increasing “by between 13 and 16 points the proportion of those who would consider voting Labor, across all groups, including likely Conservative voters (from 26% to 41%) and likely Reform UK voters (from 18% to 31%).”
In the area of the UK-EU relationship, political expediency and economic logic point in the same direction. If the new Labor Party leadership promises to reconsider Brexit, the resulting improvement in business confidence and voter enthusiasm will do the rest of the heavy lifting. And after six consecutive failed governments and years of economic malaise, the UK may have its first successful government in a decade.
