UK ministers admit to Brexit pains, but the relief is on hold

Good morning. In her Mansion House speech Rachel Reeves set out reforms to the UK’s pensions funds that are aimed at boosting the economy. I don’t have very much to say about that other than “they’re good”. The plans recognise and address a well-known problem and she has sensibly avoided silly ideas about limiting what they can do — read the editorial board’s verdict for more on that, and Toby Nangle for more on that topic.

They are not going to be politically contentious either because they build on Jeremy Hunt’s policies in this area. What might prove difficult down the line is that everyone in British politics knows we have a problem with risk-averse pension funds. As one shadow cabinet minister put it to me, “too many act like they are still defending a large defined benefit scheme that is well in the black, rather than the opposite” (a sentiment that I heard almost word-for-word from a government minister later that day). But it is one thing to say “you should be less risk averse” and quite another to consistently back it.

However, that’s a question for another time. For now, some thoughts on something else she said in her speech.

Rebuilding EU relations

A striking feature of our new government is that ministers are willing to say that Brexit has harmed the UK, though they are less willing to say they will do anything to fix the problem.

Rachel Reeves became the first chancellor since George Osborne in 2016 to explicitly acknowledge that leaving the EU was not a good idea last night, saying the UK faced “structural challenges, including those which have come from Brexit”. She then reiterated that Britain would not be seeking to rejoin the single market or the customs union. Earlier this year, Nick Thomas-Symonds, Keir Starmer’s Brexit fixer, said that the UK’s exit from the EU had harmed the country’s international standing.

So, it is progress that the UK now has a government that would openly acknowledge that we have a self-inflicted wound. But limited progress in that it continues to rule out calling an ambulance. This opens up a major opportunity for pro-Europeans in this parliament by creating the space for others to argue for closer ties, as the Bank of England governor Andrew Bailey did last night.

At the moment, “Cut the Red Tape” is the campaign doing the smartest job of this. It advocates reducing barriers between the UK and EU in order to benefit our creative industries. This is exactly the kind of thing that British Eurosceptics did during their long, long campaign to take the UK out of the EU: identify a problem, don’t get too stuck in the weeds of how it would be fixed, don’t get bogged down in EU-related jargon, simply hammer that message home.

Although I suspect that Donald Trump’s presidency will increase the number of people in British politics calling for the UK to re-enter the EU, Robert Shrimsley is exactly right in his column this week to note that the diplomatic challenge of Trump actually makes this harder not easier. Among other things, it will mean that both the UK and EU will be focused on security, rather than having any bandwidth for the UK to join the lengthy EU accession process.

But nonetheless, the political opportunity for Britain’s pro-Europeans is to use the space that this new government has created for them to say “why not rejoin, then?” and to campaign on single issues that shift us closer. The risk for them is that the geopolitical crises facing the new government means that this window turns out to be a brief one.

Now try this

I’m off to my first gig at this year’s London Jazz Festival tonight — there are still some tickets to both paid and free gigs going I believe.

However you spend it, have a wonderful weekend!

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