Avoid ‘political anthrax’ of austerity with better EU deal, think tank urges

Rachel Reeves should avoid the “political anthrax” of austerity and pursue closer links with the EU in her spring statement, a think tank has said.

The Chancellor is expected to announce deeper cuts to public spending on Wednesday as she seeks to meet her debt rules against a background of faltering growth and higher borrowing costs.

Her announcement comes a week after Work and Pensions Secretary Liz Kendall unveiled plans to slash £5 billion from the benefits bill, partly by reducing support for disabled people and those claiming incapacity benefits.

On Tuesday, think tank Best for Britain urged Labour to focus instead on growing the economy by securing an improved trade deal with the EU, arguing this was a more popular move than cutting benefits.

The think tank pointed to a poll carried out by YouGov that found 46% of people thought a new EU trade deal was a better way to grow the economy than trying to encourage people back into work with welfare cuts, compared with 28% who said the opposite.

Among people who voted Labour in 2024, the proportion backing a new EU deal instead of cutting benefits rose to 65%.

Naomi Smith, chief executive of Best for Britain, said: “Austerity is political anthrax, being deeply unpopular, economically shortsighted 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 right across the country, boost public finances and reduce prices for consumers.”

Labour has said it wants to secure an improved trading relationship with the EU as part of its “reset” of relations with the bloc, including by reducing barriers to trade through signing new agreements.

But it has ruled out any return to the single market or customs union, or anything that would involve the reinstatement of freedom of movement with the EU.

The YouGov poll, which asked whether welfare cuts or a new EU trade deal would be the most effective way of growing the UK economy, surveyed 2,187 British adults between March 19 and 20.