As opinion continues to shift against Brexit, Richard Corbett says Labour needs to rethink its stance especially on the single market and customs union if it is to achieve economic growth
[Original print publication Sep 2024]
In the election campaign, Brexit was the elephant in the room. The Conservatives did not dare mention it because public opinion is now firmly of the opinion that Brexit was a mistake with them to blame (with some polls indicating that over 60% would vote to rejoin if a referendum were held now). Labour did not mention it (much) because it was still afraid of losing votes in a few traditionally Labour areas that had supported Brexit. Labour made no commitment to rejoining the EU and even ruled out joining the customs union or the single market. This, as we shall see, is likely to come under pressure as it contradicts the pledge to focus relentlessly on economic growth.
What Labour did say in its manifesto was that it will seek “an improved and ambitious relationship with our European partners”. And since the election, it has moved swiftly to re-establish cordial contacts with European partners.
Specifically, the Labour government will seek to:
- Reduce some of the barriers to trade between the UK and the EU. This would involve, notably, a veterinary agreement, mutual recognition of professional qualifications, visa exemptions for touring performers (such as musicians and actors) and regulatory alignments in key sectors such as chemicals.
- Rejoin some of the EU’s technical agencies (at least as observer or associate members), such as Europol.
- Negotiate a security agreement with the EU. This may turn out to be of great significance in view of the situation in Ukraine and especially if Trump is reelected in the USA. It would include security in the widest sense of the term – not just military cooperation but sanctions, cybersecurity, counterterrorism, fighting traffickers, combatting climate change, and more.
- Build on the still shared commitment to achieve net zero emissions, to cooperate on climate and energy questions (presumably including cross-border energy interconnectors, and the carbon border adjustment mechanisms).
This is all well and good. And the government might also seek to participate again in the Erasmus student mobility scheme, that the Johnson government pulled out of at the last minute of Brexit negotiations despite having previously pledged to stay in it – a bit of gratuitous cultural vandalism by the Tories.
But the realities of government may force Labour to go further and faster. The biggest challenges it faces in government are the lethargy of the economy and the catastrophic state of public finances. With both debt and taxes at levels not seen since the aftermath of the second world war, the election campaign was characterized by debates on whether it might be possible to spend or save an extra £3billion here or £4billion there. These figures are dwarfed by the £40billion a year of lost tax revenue which has been caused by Brexit (according to the government’s Office of Budgetary Responsibility). Similarly, if the Labour government is to re-kindle economic growth, it cannot ignore the 5% loss to GDP, the lost trade with our main export market (and main source of our supply chains), and the extra costs on businesses caused by Brexit.
In this context, the over-cautious red lines mentioned by Labour in the election campaign – saying no to joining the customs union and no to full single market membership – will severely limit the potential improvements. There will be costly border checks for as long as there is a customs border. There will be no return to the frictionless trade that existed pre-Brexit, where any product manufactured in the UK could be sold without further ado (i.e. no extra conformity tests, VAT forms, export permits, labelling requirements, etc) across the whole of the EU and the EEA, unless we align with single market rules and standards (standards that we helped set when we were a member). There will be little scope to improve trade in services (even for touring performers and musicians) without some free movement.
What seems to hold the government back is a belief that full participation in the single market would require a full restoration of freedom of movement. Freedom of movement is seen to be an insurmountable obstacle, given the public concerns about record levels of migration to Britain.
But in fact, most migration to Britain is from outside the EU, which is (and was, even when we were a member of the EU) a matter for national regulation. It is for Britain to decide how open or restrictive it wants to be.
Migration from the EU was always a smaller number and is now considerably so. And here, we are talking about a reciprocal right, with millions of Brits living in other EU countries (indeed Brits were the EU’s biggest beneficiaries of the right to settle anywhere in the EU, with more British people living in other EU countries than any other nationality). But it was not an unconditional right: those exercising it had to find work or be self-sufficient, conditions which Britain failed to enforce at the time, but could if free movement (perhaps re-named as “conditional free movement” to emphasise this point) were to be restored. Nor was EU freedom of movement a cost to the exchequer, as EU citizens in Britain paid one third more in taxes than they received in benefits and services combined. In short, EU freedom of movement was not really a problem.
Furthermore, far from enabling Britain to “take back control” of its borders, Brexit has actually removed key tools for controlling that border. When we were in the EU, Britain could use the internal EU agreement that asylum-seekers should be processed by the EU country in which they first arrived. You could waive that rule, if you wanted, as Germany did. But Britain used it to send thousands of asylum-seekers back to the EU country they first arrived in — something it can no longer do. Britain was also able to participate fully in the EU’s system of cooperation among police and intelligence forces. This meant it could, when needed, get information on people when they arrived at the border, from fingerprints to criminal records. It also meant cooperating to fight international gangs of people traffickers. Brexit was a shot in the foot as regards its supposed major benefit of controlling the border.
If economic reality forces the Labour government to go further, and to at least rejoin the single market and the customs union, and even if that includes conditional free movement with EU countries, it will find that this does not throw up as many problems as it fears. It may even be popular. Many businesses, universities, artists, and others want it. So do Labour Party members. Above all, if the tracker opinion polls show that public opinion continues its gradual but relentless shift in favour of rejoining the EU, then surely these smaller steps, at least, should be easier.