Unbound Briefing Room – W/C 26 October 2026

The British Business Bank (BBB) is expected to receive another £5bn in the Budget, but would this be compatible with EU rules on state aid? Probably not. The BBB had to be cleared with the EU when it was set up in 2014, which limited its funding and activities. But thanks to Brexit, the UK can now increase funding for the BBB without EU approval.

Talking about Brexit over the weekend, Angela Rayner claimed that “the evidence is really clear in terms of 20% down in exports to the EU, 16,000 businesses no longer exporting to the EU, it has been the red tape on the EU deal we got, has been damaging to the economy”.

Our Advisory Council member Julian Jessop took these claims apart in another post on X. In short, exports to the EU have not fallen by 20%, even in volume terms or as a counterfactual (i.e. relative to what might otherwise have happened). This is due in large part to the continued strength of services exports.

Exports of goods to the EU have fallen slightly in volume terms since 2019, but they were never strong in the first place. There has been hardly any growth in exports of goods to the EU for decades, even when the UK was a full member of both the Single Market and Customs Union.

Moreover, exports of goods to the rest of the world have also been relatively weak since 2019, which shows this is not just about Brexit. Oher important factors include the UK's relatively high industrial energy costs and the general weakness of world trade.

As for the claim that '16,000' businesses are no longer exporting to the EU, this presumably came from an LSE paper from 2025 (they said '16,400'). But as the paper notes, that number was dominated by small exporters with fewer than 10 employees, with relatively little impact on medium and larger firms - or on total trade. Many of these will have been sending just a few shipments a year.

This figure is also yet another model-based estimate, rather than hard data (and difficult to reconcile with the official HMRC figures on the number of businesses exporting to the EU.

Finally, even if this estimate is correct, there are roughly 2,790,000 businesses in the UK (registered either for VAT or PAYE). so 16,400 would be just 0.6% of all UK businesses.

Blaming Brexit for the ‘small boats’ crisis has become fashionable. Even the Prime Minister has now joined in, although his own Home Secretary appears to disagree.

Some argue that the problem began when the UK left the Dublin III agreement, which allowed asylum seekers to be returned to the first safe EU country they had entered. But there are much better explanations for the rise in small boat crossings, which began in 2018 (when the UK was still in the EU).

The most important is the tightening of security at lorry parks, on trains and ferries, and additional restrictions at airports. This closed off alternative routes and forced people smugglers to change their business model. Illegal migrants who now arrive by boat are also more likely to be intercepted and therefore counted in official figures, whereas previously they just disappeared.

Moreover, the UK rarely used Dublin III anyway, which further undermines claims that its mere existence was an effective deterrent. And it would be naïve to believe that many EU countries would now be willing to take back large numbers of illegal migrants, especially in the current political climate. Indeed, France's own efforts to prevent small boats leaving its shores for Britain seem ineffective, despite a bilateral agreement and UK taxpayer funding.

In case you missed it, here are some of the 'Brexit benefits' in John Healey's first Budget...

1⃣ a strong commitment to 'Buy British' (hard to square this with EU procurement rules)

2⃣ additional funding for 'PuFIns', such as the British Business Bank (hard to square with EU rules on state aid)

3⃣ more cuts in UK tariffs on imports of food, drink and energy (not possible if the UK were still a member of the EU, or even a customs union)

What has the OBR said today on Brexit in the Economic and Fiscal Outlook (EFO) accompanying the Budget? Not a lot...

1⃣ As expected, the OBR ducked any assessment of the UK-EU 'reset', simply saying "the economic impact will depend on the outcome of these negotiations' (EFO, p.77)

2⃣ There is just a passing reference to "rising barriers to trade after EU exit" as one of the many shocks which have hit the UK since 2008 (EFO, p.10)

3⃣ The word 'Brexit' itself only appears three times in the entire EFO, each in the context of the "post-Brexit change in the migration regime"

4⃣ There not reference to the assumed "4%" long-term hit to productivity or the assumed "15%" hit to the UK's global trade; these do still appear in the OBR website's collection of 'Brexit analysis', last updated in July, but the OBR doesn't seem keen to draw any more attention to them!

Politico is reporting that the EU is set to scrap the ‘associate member’ offer for Canada.

Frankly, this idea was never a runner. There is no provision for "associate membership" in the EU Treaties, and the earlier suggestions from both Carney and von der Leyen bemused most EU officials. (But of course, that didn't stop the usual suspects from jumping all over this idea as a template for the UK...).

Our Advisory Council member Julian Jessop wrote more about this for us back in September. You can read his piece here.