Makerfield, Brexit and the Customs Union Question: Could Britain Undo Some of the Economic Damage?

Thursday 18 June 2026

As voters cast their ballots today in the Makerfield by-election, a contest that may mark the return of Andy Burnham to Westminster and perhaps even set her on a path towards the premiership, economic policy has once again become central to British politics. Burnham has long represented a strand of Labour thinking more willing to contemplate a fundamental reset in relations with Europe than the cautious incrementalism that has characterised the government of Sir Keir Starmer. Whether or not Burnham wins, the by-election has already reignited debate about Britain’s economic future and the legacy of Brexit.

That debate has been sharpened by a new report from the Centre for European Reform by John Springford and Anton Spisak. Their findings arrive at a politically awkward moment. While much of the Brexit argument has moved on from questions of trade and economics to issues of sovereignty, migration and national identity, the report attempts to quantify what the United Kingdom has actually lost by leaving the European Union’s economic structures and, crucially, what might be regained through closer integration.

The report’s central conclusion is striking. According to Springford and Spisak, British exports to the European Union are approximately 12 per cent lower than they would have been had Brexit not occurred. Goods exports have suffered particularly heavily, estimated at around 16 per cent below their counterfactual level, while services exports are around 7 per cent lower. The study also finds little evidence that trade agreements with non-European countries have compensated for these losses.

These findings are consistent with earlier work by the Centre for European Reform, which has repeatedly estimated substantial reductions in British trade, investment and economic output as a consequence of leaving both the single market and the customs union. Previous CER analysis suggested that the British economy had become several percentage points smaller than it otherwise would have been and that trade had declined by between 10 and 15 per cent.

Yet the new report contains a second conclusion that may surprise both Brexit supporters and many advocates of closer European integration. Rejoining the customs union alone, the authors argue, would not reverse most of the economic damage.

This distinction is frequently misunderstood. The customs union and the single market are not the same thing.

A customs union eliminates tariffs and quotas between its members and establishes a common external tariff towards the rest of the world. This reduces paperwork concerning the origin of goods and simplifies cross-border supply chains. However a customs union does not eliminate regulatory barriers. Goods may still require inspections, certifications and compliance checks if participating countries operate under different regulatory systems.

The single market goes much further. It seeks regulatory harmonisation across a vast range of economic activities and extends beyond goods into services, investment, professional qualifications, data flows and labour mobility.

Britain left both.

According to Springford and Spisak, much of the economic damage appears to stem from departure from the single market rather than departure from the customs union. This is particularly true in the services sector, which constitutes roughly four-fifths of Britain’s economy. Financial services, legal services, consultancy, technology, engineering, architecture and numerous other professional sectors depend heavily upon regulatory recognition rather than tariff reductions. Re-entering the customs union would do little to restore these advantages.

This point is particularly important because contemporary Britain is not primarily a manufacturing economy. During the post-war decades, when customs arrangements occupied the centre of European integration debates, manufacturing represented a much larger share of national output. Today Britain’s comparative advantages lie overwhelmingly in services, finance, education, research, technology and creative industries.

Consequently a customs union would address only part of the problem.

Nevertheless “only part” is not the same as “nothing”.

A return to the customs union could still generate significant benefits. Manufacturers would face fewer administrative burdens. Complex supply chains stretching across Europe would become easier to manage. Agricultural exporters would encounter fewer frictions. The automotive sector, aerospace industry, chemicals producers and food manufacturers would all gain from greater predictability and reduced bureaucracy.

The effect might be particularly significant for small and medium-sized enterprises. Large multinational corporations possess compliance departments capable of navigating customs declarations, rules-of-origin documentation and divergent regulatory requirements. Smaller firms often do not. For many businesses, Brexit did not merely increase costs; it made exporting economically unviable altogether.

A customs union would not recreate the pre-2020 trading environment, but it would remove some of the most cumbersome barriers.

The political question however is whether such gains would justify the accompanying costs.

Critics of customs union membership note that Britain would lose some autonomy over trade policy. Independent trade agreements with third countries become more difficult when external tariffs are determined collectively. This argument was central to the original Brexit campaign and remains influential amongst many voters. The House of Lords Library notes that rejoining a customs union could require modifications to some of Britain’s existing trade arrangements outside Europe.

Yet the practical value of Britain’s independent trade policy has become increasingly contested. While numerous agreements have been signed since Brexit, most economic assessments conclude that their cumulative gains remain far smaller than the losses resulting from reduced trade with the European Union, which remains Britain’s largest trading partner by a considerable margin. That is because economics consistently predicts that trade in goods has a reverse exponential relationship with the distance of the country to which goods are exported. Or, in other terms, countries trade far more with other countries that are close to them than those a long way away. And in Britain's case, that means trade with Europe is much more important than trade with India, the United States or China.

The broader issue concerns Britain’s long-term growth trajectory.

For much of the twentieth century Britain’s economic challenge was productivity. That problem has become more acute since the financial crisis of 2008. Weak investment, stagnant productivity growth and sluggish export performance have constrained living standards. If Brexit has indeed reduced trade intensity and investment, then it has compounded rather than caused these deeper structural weaknesses.

This is where the politics of Makerfield become relevant.

Burnham’s appeal has always rested less upon abstract constitutional questions than upon economic pragmatism. His political identity is rooted in the proposition that economic policy should be judged by outcomes rather than ideology. If he returns to Westminster and eventually secures Labour’s leadership, he may find himself confronting a difficult choice. The economic evidence increasingly points towards the benefits of closer European integration, yet public opinion remains divided and many voters remain suspicious of any proposal that appears to reopen the Brexit debate.

The Centre for European Reform report therefore presents an uncomfortable conclusion for politicians across the spectrum.

For committed Brexiteers, it reinforces growing evidence that leaving Europe’s economic institutions imposed substantial costs on Britain.

For pro-Europeans, it demonstrates that simple solutions are unlikely. Rejoining the customs union would help, but it would not restore the economic position Britain enjoyed before Brexit. Much of the damage appears tied to departure from the single market, particularly in services, where Britain’s greatest strengths reside.

The result is a strategic dilemma. Britain can continue to operate with a relatively distant relationship to the European Union, accepting the economic costs as the price of sovereignty. She can seek a customs union, gaining some economic benefits while stopping short of deeper integration. Or she can gradually move towards more comprehensive economic alignment, recognising that prosperity and sovereignty are not always perfectly aligned objectives.

The Makerfield by-election will not decide that question. Even if Andy Burnham wins and eventually becomes Prime Minister, no single politician can alter the underlying economic realities identified by Springford and Spisak.

What the by-election may do is reopen a conversation that much of British politics has tried to avoid. A decade after the Brexit referendum, the question is no longer whether Britain left the European Union. She did. The question is what kind of relationship with Europe best serves Britain’s economic interests in the decades ahead.

The Centre for European Reform’s latest analysis suggests that the answer may require a level of political honesty that has been conspicuously absent from much of the debate so far.