The Labour Party’s red lines will restrict its ambitions for changing the EU-UK relationship, but if it forms a government it should push Brussels for concessions, particularly on trade in goods.
The Labour Party seems likely to form a government after the British general election on July 4th. It will have a full agenda: growth is slow, public services are stretched and housing is in short supply. Brexit has not helped: estimates indicate it has lowered GDP by as much as 5 per cent. Labour will not reverse the damage caused by leaving the EU, and has indeed laid out red lines for the EU-UK relationship that would prevent it from doing so. Even within its red lines, however, Labour could afford to be more ambitious on trade.
Under Keir Starmer, Labour has consistently held to three red lines: no single market membership, no customs union and no freedom of movement. These red lines would preserve UK autonomy over key policy areas such as immigration, services regulation and trade relations with third countries. For example, rejoining the customs union would make negotiating free trade agreements (FTAs) virtually impossible. It would also mean abandoning the FTAs the Conservative government struck with countries such as Australia and New Zealand, as well as membership of the regional FTA for Pacific countries, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). And there would be no guarantee of instead getting access to the FTAs the EU has negotiated with these countries – since in most cases this would involve renegotiating the agreements. Although the economic gains from the UK’s post-Brexit FTAs are small – certainly a fraction of the benefits of a customs union – abandoning them so soon after having invested a great deal of political and diplomatic capital in them would invite criticism.
However, insisting on UK autonomy has costs. No customs union means the continued existence of red tape on the border. No single market membership and no freedom of movement means that significant improvements in market access for UK services would be hard to achieve, including for the vital financial sector.
Labour has nevertheless signalled three areas where it wants improvements:
- Mutual recognition of qualifications to allow regulated professions such as architects and health care professionals to practice in the EU and vice versa.
- Arrangements for short-term business visitors to allow UK-based musicians and other performers to tour more easily in the EU.
- A veterinary agreement to facilitate trade flows in foodstuffs.
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