Britain and Europe

Can Labour take back control of the Brexit negotiations?

15 December 2017

Does a Labour government have a better chance than the Conservatives of securing a good deal for Britain if the party beats the Tories in a general election before 2019?

Matthew Sowemimo

Labour could inherit the Brexit negotiations before they reach their conclusion in 2019. Would a newly elected Labour government be in a better position to secure a comprehensive trade deal than the Conservatives? What factors would influence how Labour formulates its negotiating position?

Labour’s current public position is that it wishes to see a transitional period before the UK leaves the European Union. The party has said it wants to retain as many of the benefits of the single market as it can subsequent to our departure and is open to remaining within the customs union. Keir Starmer, Labour’s spokesperson on Brexit, has also said that the way in which the principle of free movement of people applies to the UK will need to be amended.

Labour has core constituencies that are strongly pro-European, particularly the party’s young supporters and most of the trade union movement. The party leadership will be mindful of the extent to which its 2017 general election vote was boosted by remain voters that defected from the Conservatives. Labour also wants to recover its position in Scotland and its policy on Europe could become another wedge used by the Scottish first minister, Nicola Sturgeon, to drive Labour voters into the Scottish National party (SNP) fold. Perhaps the greatest pressure for a Labour government negotiating a Brexit settlement would be the risk that failing to secure access to the single market could bring about a second Scottish independence referendum.

A Corbyn-led government might also find its tense relationships with the business community are further aggravated by the prospect of the UK losing access to the single market. London has become a Labour electoral bastion. The party will need to consider if the loss of key service sectors would disproportionately damage the capital’s economy

In some respects the party’s stated position is closer to the other EU member states than the Conservatives. Labour ministers would face no internal resistance to accepting the jurisdiction of the European court of justice in either a transitional period or in any long-term trade settlement. Sovereignty issues, so central for Conservative anti-Europeans are far less salient for Labour. However, in other respects the party might face just as formidable barriers at the current government.

Jeremy Corbyn and John McDonnell have said they believe the single market is an obstacle to the more extensive use of state aid to support British firms. While the French government could be a potential ally in a bid to amend single market rules in this regard, the Germans can be expected to be implacable opponents. In addition, if a Labour government is dependant on parliamentary support from the SNP, it would be even harder for McDonnell to unravel single market rules.

The Conservatives were told in no uncertain terms that the four freedoms would be indivisible and that free movement was non-negotiable. If Labour was willing to make concessions in other areas it might be able to secure a Europe-wide dispensation restricting the right of free movement. In practice some member states have been able to place restrictions on this right, such as Belgium’s insistence on making this conditional on having employment. Labour might be faced with a choice of trading off restrictions on free movement against full acceptance of state aid rules. Labour faces just as strong electoral pressure to reform freedom of movement as the Conservatives. While a majority of overall Labour voters want to remain in the EU, two thirds of Labour held parliamentary constituencies voted to leave. Many northern Labour MPs believe that hostility to free movement was a decisive factor in the scale of the leave vote in their constituencies.

In one other respect, a Corbyn-led government might have fewer negotiating cards at its disposal than the Conservatives. Theresa May has sought to bargain with the French and Germans using Britain’s contribution to European defence. However, given the Labour leadership’s long-standing mistrust towards Nato and its disapproval of a number of Nato deployments, such as sending troops to Estonia in 2016, a Corbyn premiership may have reduced bargaining power in the defence arena. France and Germany will want Britain to retain its spending commitments of contributing 2 per cent of GDP towards defence. Given Labour commitments to reverse austerity in pressing areas like the health service and social care, it is questionable whether a Labour administration would prioritise defence spending in its initial years.

Nonetheless, there is much scope for a Prime Minister Corbyn to reassure Berlin and Paris about how a post-Brexit Britain could continue to work in partnership with European states on shared security challenges. The 2017 Labour manifesto said, ‘we will continue to work with the EU on a range of operational missions to promote and support global and regional security’. A Labour government that wishes to influence to exercise a leadership role on climate change, international development and human rights will find again and again that it finds allies in European capitals rather than Washington.

The biggest challenge for any British government would be to retain the core benefits of single market membership for services. Corbyn and McDonnell have frequently spoken about tariff-free access to the single market for goods. However, for an economy that depends on services for 80 per cent of its trade, this emphasis is misplaced. Labour could expect to face the same dynamic among member states as Theresa May and David Davis – the desire not to reward a state exiting the European Union in order to hold together the single market project. Labour negotiators might be faced with harsh choices about which service sectors they prioritise for retaining market access.

The real challenge for a Labour government is likely to be maintaining as large a degree of single market access for our service industries, and Labour may ultimately face the choice of abandoning objectives over free movement and state aid rules to achieve this. To secure the deal it wants, Labour may need to seek a deadline extension, which might require the government to cede to European pressure to increase its contribution to the Brexit divorce settlement or maintain existing levels of defence spending.

If EU member states refuse to give Britain a considerable degree of market access, a Labour Government could face the unenviable choice of accepting a disadvantageous agreement or revoking Article 50 and staying in the EU. While remaining could help rebuild business confidence, it would again make Labour MPs vulnerable to attack by the right, whether Ukip or Conservative. The prospect of Jeremy Corbyn signing a limited and flawed secession agreement could well reignite an ideological battle within Labour and stimulate a major parliamentary rebellion, including members of the soft left and the Blairite right. For now, Labour is spectator to the May government’s divisions. In due course, though, it could face its own crisis of confidence.

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