Labour's Shift Towards Closer EU Relations Post-Brexit

The Labour Party, under the leadership of Rachel Reeves, is increasingly prioritizing closer relations with the European Union (EU) as a response to the economic repercussions of Brexit. This shift was highlighted by Reeves' attendance at a dinner with EU finance ministers in Washington, marking the first such engagement for a Labour chancellor since the UK's departure from the EU. The party's new approach aims to address the significant economic damage attributed to Brexit, with estimates suggesting a potential 8% reduction in the UK economy, according to research from the National Bureau of Economic Research.

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The economic fallout from Brexit has prompted Labour to reconsider its stance on EU relations. Reeves emphasized that no individual trade deal can match the importance of the UK's relationship with the EU, which accounts for nearly half of the UK's trade. Despite this, Labour's proposed "reset" in relations is projected to yield only a 0.5% increase in GDP, raising questions about the effectiveness of this strategy.

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Reeves and Labour leader Keir Starmer are navigating a complex political landscape where support for rejoining the EU is growing, particularly among progressive voters. Polling data indicates that over 80% of Labour, Liberal Democrat, and Green party supporters favor rejoining the EU, while only 19% of voters strongly support the government's current EU approach. This disconnect poses a risk for Labour, especially in "red wall" constituencies where progressive voters are increasingly drawn to the Liberal Democrats and Greens.

Why Labour's Brexit "reset" is backfiring - and rejoining the EU polls better with its own voters

Critics argue that Labour's "halfway house" approach to Brexit lacks electoral benefits compared to a clear commitment to rejoining the EU. Sir John Curtice, a polling expert, noted that Labour is losing progressive voters at double the rate it is losing support to pro-Brexit parties. Additionally, Anand Menon from UK in a Changing Europe highlighted the contradictions in Labour's position, suggesting that aligning with EU regulations without full membership could lead to the UK becoming a rule-taker, complicating governance.

Why Labour's Brexit "reset" is backfiring - and rejoining the EU polls better with its own votersThe Guardian

Labour's current strategy involves exploring "dynamic alignment" with EU rules to gain better access to the single market, although the specifics remain unclear. Critics, including Jill Rutter from the Institute for Government, have pointed out the irony of Labour's current trajectory resembling Theresa May's failed Chequers deal, which also sought alignment with the EU. Starmer's past role in opposing May's withdrawal agreement adds complexity to the party's current negotiations.

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As Labour approaches a potential leadership contest, the party's relationship with the EU will likely remain a central issue. Some backbenchers are advocating for a "Swiss-style" approach, which could involve a return to free movement—a contentious topic in the current political climate. The party's ability to navigate these discussions will be crucial in maintaining support among progressive voters and addressing the ongoing economic challenges stemming from Brexit.

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• “Brexit did deep damage,” — Rachel Reeves, Chancellor of the Exchequer

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• “We think that there is inherent risk with halfway houses,” — Tom Brufatto, Director of Policy and Research at Best for Britain

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• “At a certain point, they’re not going to get the benefits without the obligations.” — Anand Menon, Director of UK in a Changing Europe

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