By Michael R. Bloomberg
The fact that the 10th anniversary of Brexit coincided with the fall of yet another British government is a tell-tale sign of a failed experiment. Now, the question for the United Kingdom and the European Union is not so much what they should do next, but whether they can find the will to do so. As the owner of a business that grows in both regions, and as an American who recognizes that the U.S. benefits from its success, I hope they succeed.
It was clear in 2016 that leaving the EU would be a serious mistake. A decade later, the costs are clearer than ever – and continue to pile up. The venture yielded none of the economic benefits it promised, but almost all of the foreseeable drawbacks, as well as a level of political instability – six, soon to be seven, prime ministers in 10 years – unprecedented in modern British history.
Today, a large majority of young voters are in favour of rejoining the EU, while polls show that most Britons recognise that leaving was a mistake. No wonder, given the results.
If the goal of Brexit was a more "simplified" and competitive Britain, the evidence clearly shows that it has failed. The UK budget office estimates that Brexit will lead to a 4% reduction in productivity in the long term compared to the level that would have been achieved if the country remained a member of the EU. Other studies show that Brexit has already reduced the UK's GDP. It is not surprising that businesses that have had the most exposure to the EU through trade, labour or property issues have been most affected.
The promised regulatory benefits also proved to be an illusion. Britain still largely follows EU law, but it no longer has the right to vote on its formation. The estimated benefits of new trade agreements are small and overshadowed by costs.
Nor did it put an end to the high levels of immigration, as many Brexit supporters promised. In fact, the exact opposite happened. While net migration from the EU fell sharply, net migration from non-EU countries increased from around 200,000 before Brexit to almost 1 million at its peak in 2023, and remains above pre-Brexit levels. Irregular arrivals also remain much higher than before Brexit, and the UK has lost direct access to some of the EU's border security and policing tools, which has hampered efforts to combat small boat arrivals.
And as if that weren't enough, Brexit has "absorbed" the attention of government officials for years, wasting time and energy that could have been directed towards the country's real needs: more investment, higher productivity and reform of public services. The numerous challenges that the new prime minister will now face are all more difficult than they would otherwise be, in large part because the country is poorer than it would otherwise be.
But Europe also lost. A union now obsessed with competitiveness, security and strategic autonomy is weaker without the weight of Britain's economic might, military resources and diplomatic might. And the world has changed in ways that make splitting up increasingly costly over the years. Russia is more dangerous and China more powerful, while the UK's special relationship with the US is less certain. In this environment, intra-European friction is a luxury that neither side can afford.
The possibility of Britain rejoining a reformed, more competitive EU is not a panacea, but it is a goal that both sides must work towards, given the significant benefits that each will reap. However, this is still difficult. In the meantime, tangible benefits of integration are still achievable, provided both sides show the will.
This should start with greater investment in the security sector, from both the UK and the EU. Europe's military spending has increased, but is still below NATO's targets, and its effectiveness has been undermined by fragmentation and insufficient supplies. Closer cooperation between the EU and the UK on joint procurement, replenishment of arms and ammunition stockpiles, cyber resilience and defence industrial capability will benefit both sides.
The UK and the EU can also reduce economic friction. Facilitate border controls to help exporters. Connect carbon emission allowance trading systems to reduce compliance costs. Coordinate electricity markets to reduce bills, improve resilience and support carbon removal. Benefits that have been promised for a long time, but the results are minimal.
Reducing economic barriers should also involve greater cooperation in the labour market, starting with young people. Young Britons are the ones who have lost the most from Brexit and know that they are suffering because of it. More than 80% say they would rejoin the EU and should not be prevented from seeking educational and professional opportunities there.
At the same time, wider access to the largest English-speaking market on the EU's doorstep will provide Europe's young people with valuable work and language experience. Discussions about the details — how many should be eligible, how long they should be allowed to stay, how much they should pay — should not be an insurmountable obstacle, as long as both sides show good faith.
Such reforms will fail to repair the damage done over the past 10 years, but they would be the kind of progress that could allow a government to survive for more than a year or two.
I remain optimistic about their prospects for success, given their underlying advantages. However, the past decade has shown — and recent geopolitical conflicts have underlined — how dangerous it is for any country or region to attempt to move forward on its own. Democratic states are strengthened — economically, politically, militarily and culturally — when we evolve together. And as the democratic values and security issues that unite the UK and the EU come under attack, close cooperation is more necessary than ever.
Now that the Brexit fog has dispelled and the damage is evident, the question is whether Britain and Europe are ready to repair their relationship to rebuild their future. The fate of the new government now being formed in London depends on the answer.
BloombergOpinion
