UK’s shadow chancellor promises Labour will repair trade ties with EU

Labour Party UK updates

Rachel Reeves, UK shadow chancellor, has committed Labour to working with Brussels to fill in “gaps” in Boris Johnson’s Brexit deal, to help professionals, the food sector and creative industries.

Reeves said the prime minister had “a blind spot” when it came to improving relations with the EU — by far Britain’s biggest trading partner — and that the Labour party wanted to bolster Britain’s export sector.

In an interview with the Financial Times, Reeves said boosting exports was one of the “five tests” Labour was setting the government as the economy started to recover from the effects of the coronavirus pandemic.

She also confirmed that Labour was likely to oppose a mooted plan by Johnson to fund £10bn in improvements to social care through a 1 percentage point rise in national insurance contributions.

“I don’t think national insurance is the way to do this,” she said, pointing out that people did not pay the levy beyond the state pension age and that such a system would therefore be grossly unfair to the young.

On Brexit, Reeves defended Labour’s decision to back Johnson’s “thin” trade deal with the EU — the Trade and Cooperation Agreement — in spite of the misgivings of many within her party.

“No deal would have been a disaster,” she said. Labour’s deep divisions on Brexit has meant that the party has barely talked about the issue in the past few months.

But the former Bank of England economist, who became shadow chancellor in May, said a Labour government would improve the agreement: “We thought the deal would be built on, but gaps have not been filled in.”

She said that “you need a veterinary deal”, to help the food and drink sector avoid a lot of paperwork and checks at the border. This has so far been resisted by ministers because it might infringe on UK sovereignty.

Sam Lowe, senior research fellow at the Centre for European Reform, argued that a Swiss-style deal of this kind would leave the UK “permanently bound to EU food hygiene rules”, but in return there would be no more need for export health certificates and other red tape.

Reeves said she wanted to address the post-Brexit bureaucracy that had hit the ability of British musicians and theatre companies to tour across various EU countries, a problem that would become more serious once the pandemic subsided and travel curbs had eased.

She added that she would like a deal with Brussels on the mutual recognition of professional qualifications. Currently, professions from doctors and vets to engineers and architects must have their qualifications recognised by the EU member state in which they want to work, with carve-outs for short business trips.

Labour’s five tests would assess whether UK industries were thriving, whether people had greater job security and choice, whether pay was rising and living costs falling, whether growth was being spread more evenly across the country and whether the recovery was sustainable, she said.

Reeves acknowledged the UK economy was rebounding but said it was underperforming. She drew inspiration from US President Joe Biden’s economic plan, including his “Buy American” initiative to boost domestic manufacturing.

Labour is committing to using its public procurement muscle to favour British suppliers, insisting that the policy would not break World Trade Organization rules and that it would deliver greater value for the taxpayer.

She said that France, along with the US, were among the countries pursuing similar policies, where weight was given to “value for money” in its broadest sense, including investment in areas such as skills and apprenticeships that might be strengthened by “buying British”.

“Biden is ripping up a lot of the rules, and the economy there is growing faster and producing jobs that support families,” she said.

Reeves added that while buying steel from China might appear cheaper than buying from UK suppliers, it was being produced to lower environmental standards. “It’s not reducing carbon in the atmosphere — it’s offloading it elsewhere.”

Labour is still fleshing out many of its economic policies, but Reeves — who replaced Anneliese Dodds in Keir Starmer’s shadow cabinet reshuffle this year — is setting out the framework for the party’s approach running into the next general election scheduled for 2024.

While the “Buy British” message is intended to resonate in the Labour’s former heartlands that stretch from North Wales across the north of England and the Midlands, now increasingly turning to the Conservatives, her promise to rebuild trade ties with the EU will please Labour’s metropolitan wing.

“Under the Tory government our growth slowed to below [that of] our competition and, with their current plans, our recovery will be even slower,” she claimed.


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