As Theresa May and her Brexit “war cabinet” meet on Wednesday, there is much talk about how confused they are on the UK’s future trade relationship with the EU. But Labour is equally divided on the matter — and the course of the Brexit saga depends to a considerable degree on whether Jeremy Corbyn’s party can resolve internal differences.
As it happens, Labour’s top team is also heading for a crunch meeting. Shadow cabinet members are expected to hold a “Brexit away day” at some point this month. One Labour figure suggests Corbyn will be “open minded” over the end state and could support Britain remaining permanently in the customs union. Another warns: “Don’t hold your breath.”
Labour has been divided over Brexit since the referendum. Keir Starmer, Brexit spokesman, has been pushing in a pro-EU direction, leaving open the possibility of staying in the customs union for good. But Mr Corbyn and John McDonnell, shadow chancellor, believe the EU is a capitalist club and that the UK is better off out of the single market and customs union altogether.
Allies of Mr Corbyn also fear alienating the pro-Brexit working class supporters in northern constituencies. “They remain frightened of Mrs May ever being in a position to say that Labour has repudiated the referendum result,” says former Labour minister Denis MacShane.
Labour’s ambiguity matters because MPs in the Commons, and not ministers in Whitehall, may end up resolving the customs union issue. Two trade bills are set to be debated in the Commons before the end of February and two Conservative MPs — Anna Soubry, a former business minister, and Ken Clarke, the former chancellor — have said they will try to get cross-party support for keeping the UK’s current customs arrangements with the EU.
Many pro-Europeans are eyeing this vote as a potential resolution of the customs union issue, As today’s full-throated editorial in George Osborne’s Evening Standard argues, the UK cabinet should resolve to stay in the customs union. But “if it won’t lead in the national interest, it’s time for Parliament to take back control.”
If Labour were to back the Clarke-Soubry amendment, or table one of its own, that could keep the UK in the customs union for good — and destabilise the government. But what will Mr Corbyn do?
Mr MacShane doubts he will rally to the soft Brexiter cause. “I don’t expect Jeremy to be out there making arguments for staying in the customs union or single market. When you look back over his speeches and interventions over many years, the EU has never been an issue for him.”
But Mr Corbyn’s stance makes no sense electorally. As the pollster Peter Kellner argues on the Infacts blog this week, a recent YouGov poll suggests that if Mr Corbyn sticks to his pro-Brexit stance, he will see Labour losing a massive 3m Remain voters and gain just 300,000 extra Leave voters in return. A huge net loss.
By contrast, if Corbyn fights a “Tory Brexit”, the impact is neutral. He will lose 1m Leave supporters who voted Labour last year. But he would gain around 600,000 Remain voters, as well as a fair number of those who have attained voting age since the 2016 referendum.
As Mr Kellner puts it: “Lashing Labour to the mast of an SS Brexit that is holed below the waterline could see the party consigned to the vasty deep, from where votes, like spirits, never reappear.”
“The UK’s high-tech and medium-high-tech industries are most at risk of a significant slowing of production after Brexit . . . Even signing a free-trade agreement with every other country in the world would not make up for leaving the EU without a trade deal” (UK Trade Policy Observatory)
Brexit: are women’s voices going unheard?
“The EU has made clear that gender equality is a fundamental principle which must be upheld by the European Court of Justice and it is not clear how this overarching commitment will apply in the UK after withdrawal.” (Dr Susan Milner, reader in European politics, University of Bath, in The UK in a Changing Europe).
Relish the opportunities of life outside the EU
“The benefits of being outside the customs union are both the ability to conduct trade deals across the globe and to cut tariffs if we so choose. The latter has not received as much attention as it should in the recent debate.” (Dr Gerard Lyons, Chief Economic Strategist at Netwealth Investments, in BrexitCentral)
The National Institute of Economic and Social Research has raised its forecasts for GDP growth this year and next, to 1.9 per cent, assuming a “soft” Brexit. However, it warns:
“There is a risk that talks between the UK and the EU fail and the UK ends up trading under WTO rules. We estimate that a scenario where the UK is unable to replace the existing trade deals will lead to a long-term annual loss in GDP per head of up to £2,000, or close to 6 per cent, relative to the baseline. A large part of this loss is driven by the reduction in trade but there is also collateral damage to productivity growth.”