Chancellor Rachel Reeves has been urged to steer clear of the “political anthrax” of austerity and instead pursue closer ties with the EU, as she prepares to deliver her spring statement.
The warning comes from the think tank Best for Britain, which argues that improving trade relations with the European Union would be a far more effective and popular way to boost economic growth than cutting public spending or reducing benefits.
Growing concerns over austerity measures
On Wednesday, Ms Reeves is expected to unveil further spending cuts as she struggles to meet debt reduction targets, amid weak economic growth and rising borrowing costs.
Her statement follows Work and Pensions Secretary Liz Kendall’s recent announcement of a £5 billion reduction in welfare spending, including proposed cuts to incapacity benefits and disability support.
The prospect of additional austerity measures has sparked criticism, with Labour backbenchers and opposition figures accusing the Government of reviving the unpopular policies of the 2010-2015 coalition era—an allegation ministers strongly deny.
Think tank calls for EU trade deal over welfare cuts
On Tuesday, Best for Britain called on the Government to shift its focus towards economic growth by negotiating a new trade agreement with the EU rather than resorting to further benefit cuts.
The think tank cited a YouGov poll, which found that 46% of the public believed that securing an improved EU trade deal was a better way to grow the economy than reducing welfare spending—compared to just 28% who supported the opposite approach.
Among Labour voters, support for rebuilding trade ties with the EU was even stronger, with 65% backing closer economic cooperation over welfare reductions.
‘Austerity is political anthrax’
Naomi Smith, chief executive of Best for Britain, delivered a stark warning about the dangers of austerity, urging Labour to consider an alternative path.
“Austerity is political anthrax—deeply unpopular, economically short-sighted, and devastating to hundreds of thousands of vulnerable people all at once.
But fortunately for (Prime Minister Sir Keir) Starmer, there is a popular alternative.
By protecting high British standards and striking a common-sense deal with our largest market, the Government can deliver real growth across the country, boost public finances, and reduce prices for consumers.”
Labour’s cautious approach to the EU
Despite growing pressure from pro-European voices, the Labour Government has ruled out any return to the single market or customs union. While ministers have signalled a desire to improve trading relations, they have firmly rejected any moves that would restore freedom of movement or require the UK to follow EU regulations.
Labour’s “reset” of UK-EU relations is expected to focus on removing trade barriers and securing sector-specific agreements in key industries, such as manufacturing, agriculture, and financial services.
However, critics argue that a partial approach to EU engagement will not deliver the full economic benefits that a comprehensive trade deal could provide.
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Public opinion shifting towards rebuilding EU ties
The YouGov survey, conducted between 19 and 20 March, gathered responses from 2,187 British adults. The results indicate a growing appetite for a closer economic relationship with the EU, particularly among those concerned about the impact of austerity on public services and living standards.
As the cost-of-living crisis continues to weigh on households, many believe that trade expansion, rather than spending cuts, is the best path forward.
The political gamble for Labour
With Labour’s electoral mandate built on promises of economic stability, Rachel Reeves faces a critical choice in her spring statement—stick to tight fiscal discipline, or explore a more flexible approach that prioritises economic growth over immediate debt reduction.
Balancing the demands of fiscal responsibility, public service funding, and economic growth will be a delicate act for the Chancellor. Failing to deliver on growth could weaken Labour’s position, while embracing austerity risks political backlash.
As the Government prepares to outline its next economic steps, one question remains: Will Labour take the bold step towards an improved EU trade deal, or double down on spending cuts that risk repeating the mistakes of the past?
