Britain needs to embrace AI, not seek a return to an increasingly inflexible Europe, says ALEX BRUMMER

Andy Burnham is convinced it is Brexit and Liz Truss that crushed Britain’s growth. Now he is confronting his own ‘moron premium’ – the high price that Britain must pay for borrowing.Obsession by Burnham and, previously, Keir Starmer and Rachel Reeves with cosying up to the EU, thinking it will ease pressure on living standards in Britain, is nonsense.Sure, there is stuff that we need. Exclusion from Europe’s €150billion defence fund is disgraceful. The UK is a key member of Nato and has some of the best avionics and defence tech in Europe.Firms such as Cambridge Aerospace, with ground-breaking, low-cost, AI-driven interceptor tech for drones and ballistic missiles, are as much the future as big beasts of the sector.Despite smiles at the Bayeux Tapestry unveiling at the British Museum, the UK will not receive much change from French President Emmanuel Macron on tricky issues such as ‘Made in Europe’.Better economic relations with Brussels would be dandy. Hard-pressed sectors such as farming and steel would benefit. Challenge: Britain's knowledge economy, symbolised by its pharma industry, firms such as Relx and the London Stock Exchange Group, is most susceptible to AI disruptionYet the assumptions made by the Office for Budget Responsibility, the Treasury and others that Brexit would sink the UK are totally unproven.Far more responsible for stuck growth have been the once-in-a-lifetime pandemic, geopolitical strife from the Russian war on Ukraine and endless Middle East turmoil in the three years since the Hamas October 7 attacks on Israel.Those who seek a return to the EU think it will create some kind of utopia.Border controls might speed up, but don’t count on it. Yes, the UK’s goods deficit with the EU has expanded, and that has been hugely difficult for small and medium-sized enterprises.However, regaining access is not going to change the broader macroeconomic picture. Data shows Britain’s GDP per capita growth has been in line with France and ahead of Germany since Brexit.Berlin has experienced an economic nightmare. There is some relief that the country’s RWI economic institution raised its growth forecast to a magnificent 1.3 per cent this year and 1.1 per cent in 2027.Britain’s competitive advantage is in its lighter, services-based economy. It is roaring away, with exports up 21 per cent since the pandemic.Even that cannot be taken for granted, as was noted at an Institute for Economic Affairs seminar on stagnation this week.The knowledge economy, symbolised by our pharma industry, firms such as Relx and the London Stock Exchange Group, is most susceptible to AI disruption.The idea of data centres and Anthropic robots being in charge of future prosperity is disturbing.Nevertheless, AI must be embraced if the UK is to stay ahead of a sclerotic European pack.Home sickLabour is right to identify planning reforms and housing as growth drivers.The UK needs to play catch-up in comparison with G7 rivals. Angela Rayner, as housing minister, has not been scared to take the big, controversial decisions.She has approved a data centre adjacent to Brick Lane in east London and an M&S at the Marble Arch end of Oxford Street.There is a big difference between willing housing to be built, assigning money for affordable homes and getting it done.Commercial developers fight hard to reduce exposure to affordable housing.Housing associations and councils lack the capacity and willpower to go big.Homebuilder Crest Nicholson is scaling back its targets from up to 1,500 homes in the next financial year to a 1,350- to 1,400-unit range.High energy, employment, masonry and other costs stymie the sector.Nothing hurts more than surging mortgage and debt interest bills. Fixing the bond mayhem is fundamental.Keep stakesJolly good to see Business Secretary Jonathan Reynolds reportedly nixing an exit tax for companies leaving the UK.However, I thought Chancellor John Healey was writing the Budget.What’s necessary are generous tax and other incentives to keep innovators. And use of the National Security & Investment Act to ward off overseas marauders.DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you