Brexit: Sadiq Khan calls for closer relationship with EU as report reveals £140bn cost of UK’s exit

Sadiq Khan will tonight call for a closer relationship with the EU as a new report reveals Brexit has cost the UK’s economy £140 billion. 

The Mayor of London will use a speech at Mansion House, in the City, to say that the “hard-line version of Brexit we’ve ended up with is dragging our economy down and pushing up the cost of living”. A new report by Cambridge Econometrics, commissioned by City Hall, has found that the UK economy will shrink by £300 billion by 2035 if no action is taken.

The research states that the UK’s GDP has shrunk by £140 billion due to Brexit, while London’s economy has taken a £30 billion hit. The average Briton was nearly £2,000 worse off in 2023, the report revealed, while the average Londoner was nearly £3,400 worse off last year. It also calculated that there are nearly two million fewer jobs overall in the UK due to Brexit.

The Mayor will use the prestigious London Government Dinner to make one of Labour’s strongest interventions against Brexit for years. Despite initially supporting a second referendum, the party leader Sir Keir Starmer has repeatedly said there is “there is no case for going back into the EU and that includes the single market and the customs union".

“Rather than dodging and ducking this issue, it’s incumbent on all of us to have an honest and mature discussion about the best way forward,” Khan will say. “It’s now obvious that Brexit isn’t working. 

“The hard-line version of Brexit we’ve ended up with is dragging our economy down and pushing up the cost of living.  It’s making food more expensive, adding to the acute pressures on households and having an ongoing detrimental impact on industries that are crucial to our success – such as hospitality, construction and financial services.”

Khan’s comments are backed up by voters. A recent poll by Opinium found that a majority of Britons now blame Brexit for fuelling inflation and the cost of living crisis, as well as leading to record net migration.

The survey, to mark the third anniversary of the UK officially leaving the EU, is the latest to find wide dissatisfaction with Brexit, from both sides of the debate. In this poll of 2,000 people, only 22% thought the exit has had a good impact on the UK, with 48% thinking it has had a bad impact. Almost two-thirds of respondents said Brexit has been a factor in sky-high inflation and the cost of living crisis, with only 7% saying it has kept down prices in shops.

“The cost of the Brexit crisis can only be solved if we take a mature approach and if we are open to improving our trading arrangements with our European neighbours,” Khan will say. “I agree with the Shadow Foreign Secretary, who has said we urgently need to build a closer relationship with the EU. Because a new settlement would not only turbocharge our economy and help to raise living standards, but help to unlock the growth and prosperity we need.”

The Mayor will fall short of calling for the UK to rejoin the single market, however a majority of Britons are now in favour moving back into the trading bloc. Seven in 10 Britons support a closer relationship with the EU, while 57% want the UK to rejoin the single market, a YouGov poll revealed. And 54% of people think that Brexit is not done - backed by a majority of Remain voters and Leave voters.

Brexit benefits have been in short supply recently. Over Christmas, the government announced it was not going ahead with Boris Johnson’s plans to bring back imperial measurements after 99% of respondents opposed it. It did however say that British vineyards could now sell pint-sized bottles of wine.

This year, people are only likely to blame more problems on Brexit. Soon the EU will require holidaymakers from the UK to provide fingerprints and facial scans to visit, which travel companies say will only lead to more queues and chaos.

Britons will also have to start paying a fee to go on holiday to Portugal, Greece and Spain. And at some point the government will bring in full checks on food being imported from the EU, which will inevitably push up prices. 

Responding to Khan's report, the Prime Minister's official spokesman said: "The UK has grown faster than Italy and Germany since the 2016 referendum. It's grown faster than Germany since leaving the EU in 2020.

"The IMF forecast for medium-term growth is brighter than many of our European neighbours, that includes France and Germany, and obviously Brexit provides us with freedoms that's enabling the public to access medicines faster, it's allowing farmers to get more support from the government and obviously for us to seek free trade agreements."

Ralph Blackburn is NationalWorld’s politics editor based in Westminster, where he gets special access to Parliament, MPs and government briefings. If you liked this article you can follow Ralph on X (Twitter) here and sign up to his free weekly newsletter Politics Uncovered, which brings you the latest analysis and gossip from Westminster every Sunday morning.