Chancellor says Brexit deal caused long-term damage to economy

In her remarks to a key international economic committee at the International Monetary Fund (IMF), Rachel Reeves stressed the long-term damage done to the UK economy by the 2020 Brexit deal.

The chancellor's productivity challenge has been exacerbated by the way in which the UK left the European Union,

The Office for Budget Responsibility's estimate of a 4% long-term impact relative to remaining in the EU was incorrect, and she said the UK

However, ministers have been more vocal in making such arguments since their conference last month. The Brexit agreement, which was negotiated by the Conservative government led by Boris Johnson, was drafted in 2020, but Labour agreed a deal in May to reset relations between the UK and the EU. Raising the questions from the 2020 Brexit agreement in the most high-level global economic policy council, including the G7, China, India, the EU, and the EUropean Central Bank, may have surprised everyone around the table. But it does signal a significant shift of interest, both nationally and internationally. It is expected to become a central part of the government's argument in the run-up to the Budget on November 26th, where a major component of the need for new steps, which is likely to be tax hikes, would be downgraded to a long-term UK productivity. When it announces its estimate at next month's Budget, the OBR is expected to lay out in detail why any downgrade has occurred. Brexit is expected to feature. External economists have pointed to a decline in investment after the referendum, as well as an underperformance in the export market. Some believe that the services industry is thriving, and that new freedoms are being used to conduct trade agreements around the world. The issue is volatile right now, with the government deciding on negotiating positions for the Brexit reset that includes removing most post-Brexit inspections on food and farm exports, as well as assisting UK manufacturers in order to compete for Europe's burgeoning defence budgets. European ministers urged maximum optimism in the talks to help reduce the effects of trade wars around the world. At her first Budget last November, Reeves revealed tax hikes worth £40 billion a year, as well as increases to payroll taxes paid by employers, and she insisted she would not have to repeat the process in subsequent years. However, the chancellor is now facing the prospect of adding another repair job to the public budget. At their conference, the Conservatives took a definite split on the issue, promising to cut public service by £47 billion a year if they win the next election by cuts to welfare, the civil service, and international aid.

Subscribe to our Politics Essential newsletter to stay up-to-date with Westminster's inner workings and beyond.