London Mayor Sadiq Khan, photographed in London in June 28, 2023
London Mayor Sadiq Khan, photographed in London in June 28, 2023 AFP News

London's mayor on Thursday called for closer ties with Europe and a better debate about immigration as he branded Brexit a "key contributor" to Britain's cost-of-living crisis.

Sadiq Khan, of the main opposition Labour party, said the UK should forge a "new settlement" with the European Union because Britain's 2020 departure from the bloc "isn't working".

His intervention comes in a general election year when the major political parties, in particular the ruling Conservatives, appear reluctant to talk about the repercussions of the 2016 EU referendum.

"We've got to be frank, Brexit is simply not a peripheral concern that we can leave in the past," Khan was to say in a keynote speech, according to excerpts released by his office.

"It's a key contributor to the cost-of-living crisis right now and it's resulting in lost opportunities, lost business and lost income."

He added Britain urgently needs "a closer relationship with the EU", arguing a "new settlement would not only turbocharge our economy and help to raise living standards, but help to unlock the growth and prosperity we need".

Khan, who will seek a third term in May, cited analysis commissioned by City Hall which found Britain's economy had lost out on GBP140 billion ($178 billion) because of Brexit.

London's economy is GBP30 billion smaller -- about 7.5 percent -- than its projected size if the UK had remained in the EU, the study concluded.

The analysis by Cambridge Econometrics estimated that Britain's economy would have missed out on more than GBP300 billion by 2035 if no action is taken, with the capital's economy missing GBP60 billion.

The study also found that the average Londoner was nearly GBP3,400 worse off last year due to Brexit, with almost 300,000 fewer jobs present in the capital.

Howard Cox, a rival mayoral candidate for Reform UK -- the right-wing party founded by the eurosceptic populist Nigel Farage -- called the estimates "fantasy economics... not borne out by any sort of reality".

A spokesman for Prime Minister Rishi Sunak said the British economy had "grown faster" than Italy's and Germany's since 2016.

"Brexit provides us with freedoms, which is enabling the public to access medicines faster, it's allowing farmers to get more support from the government and obviously for us to seek free trade agreements," he said.

In his speech, Khan will also weigh in on immigration policy -- long a politically sensitive issue in Britain, which Sunak will likely put at the forefront of his campaign at the next election.

Sunak has pledged to slash record levels of regular immigration and stop asylum-seekers from crossing the channel from France in small boats.

Khan was set to say he is "certainly not in favour of open borders or uncontrolled immigration, but with severe worker shortages, we must be honest about what's best for our city".

"The economic benefits, not to mention the social and cultural advantages, mean we have a duty to craft an approach that's guided by facts, not fearmongering," he added.