How EU membership could save UK's governing party and prevent an far-right victory

In the next few weeks, Britain’s ruling Labour Party will almost certainly select a new leader to replace Keir Starmer, the country’s deeply unpopular prime minister.

But this prospect has not inspired hope of a political or economic renewal. Among British media and, more importantly, global financial markets, the consensus is that any revisions to the failing Starmer government’s policies will only make things worse.

Yet there are good reasons to believe that the consensus is mistaken. For starters, all Starmer’s potential successors now explicitly recognise that stronger economic growth is a necessary condition not just for fiscal solvency.

Read more in the article by economist Anatole Kaletsky of Gavekal Dragonomics: Back to the future: why Keir Starmer’s successor would benefit from bringing UK back into the EU.

Specifically, his campaign manifesto included two foolish commitments that negated his chances of improving the United Kingdom’s economic performance: a promise to stick to unrealistic fiscal forecasts without increasing any broad-based taxes; and an adherence to the Conservatives’ "red lines" on the country’s post-Brexit relationship with Europe.

Given that fiscal austerity and Brexit were the primary causes of the economic and political malaise that Labour promised to cure, Starmer was destined to fail.

To succeed, his successor must abandon either or both commitments.

Throwing out the Tories’ "red lines" on Europe would probably be a more attractive option than an increase in broad-based taxes. Economic rapprochement with Europe would immediately boost both the British economy and the new prime minister’s domestic political support.

On this tenth anniversary of the Brexit referendum, the economic costs of leaving the European Union have become too obvious for anyone to deny.

According to the latest polling, 57% of voters now believe that Britain was wrong to leave the EU, reflecting what the country’s most respected analyst of voter behavior, John Curtice, describes as a "decisive and consistent shift away from Brexit."

Nor has the disillusionment been strictly about economics. Brexit simply has not done what its champions said it would do. Far from declining, net immigration levels almost doubled from 240,000 in 2016 to 431,000 in 2024, with the expulsion of EU citizens being far outpaced by non-European immigration driven by families and employers, including the government itself.

Economically, the possibility of a return to the European single market would galvanize business confidence and revive investor interest in British assets, including UK government bonds. And politically, it would offer a vision that could unify progressive and internationalist voters who are currently split between Labour, the Greens, and the Liberal Democrats.

This three-way split on the left has been a boon to Nigel Farage’s hard-right Reform Party, whose 30% voter support – drawn mainly from fervent Brexiteers and anti-immigrant voters – has produced overwhelming victories in local elections under Britain’s first-past-the-post electoral system.

With 83% of Labour voters, 84% of Liberal Democrats, and 82% of Greens saying they would like to reverse Brexit.

Europe is the only plausible issue that could galvanize a majority of British voters to engage in "tactical voting": supporting whichever pro-European candidate has the best chance of beating the Tories and Reform in each constituency.

If the Labour Party’s new leader promises to reconsider Brexit, the resulting boost to business confidence and voter enthusiasm would do the rest of the heavy lifting.

After six consecutive failed governments and years of economic malaise, Britain might even find itself with its first successful prime minister in a decade.