Corbyn's protectionism doesn't exclude EU Single Market membership

25 July 2018 11:06am

25 July 2018. By Michael Acton, Matthew Holehouse and Lewis Crofts

There could be more to Jeremy Corbyn’s ‘Build it in Britain’ speech yesterday than first meets the eye.

Speaking at Birmingham’s EEF Technology Hub, the UK opposition leader took aim at “cheap labor” abroad and promised that a government led by his Labour party would seek to “build things here again that for too long have been built abroad.”

At face value, the speech seems to signal that a Labour government would pursue a protectionist economic policy after Brexit, taking the axe to the root of the EU’s free trade consensus.

But on second reading, the speech might indicate a shift in Corbyn’s Brexit position — namely, the Labour leader may think he can deliver his economic and labor policies while keeping the UK in the EU’s Single Market.

That is significant. Until now, Corbyn has ruled out Single Market membership on the basis that EU regulations would constrain a Labour government’s ability to intervene in the economy.

Of course, this shift would only be meaningful if Prime Minister Theresa May’s government were to fall and Labour were to win an election between now and March 2019. But high-profile cabinet resignations and a lack of parliamentary consensus on Brexit make this a plausible scenario.

— Trains, steel and passports —

In his speech, Corbyn suggested that EU rules don’t stand in the way of his ambitions to support UK industry. In fact, he said, that line of reasoning was merely an excuse used by the ruling Conservative party.

“Too often, we have been told by Conservatives who are ideologically opposed to supporting our industries that EU rules prevent us from supporting our own economy,” Corbyn said. “[But] if you go to Germany you’ll struggle to find a train that wasn’t built there, even though they’re currently governed by the same rules as us.”

Repatriating manufacturing industries to the UK, then, is possible even while remaining part of the Single Market. And rather than ripping up the EU’s state aid and procurement rulebook, Corbyn hinted that Labour would merely seek “exemptions or clarifications” on these rules.

The comparisons to EU neighbors don’t stop there.

“When the steel crisis hit in 2016, Italy, Germany and France all intervened legally under existing state aid rules but our government sat back and did nothing,” Corbyn said, challenging the argument often made by Brexit supporters that EU red tape prevents the UK from intervening to prop up key industries.

Corbyn added that the UK was outsourcing core national work to other EU countries — something that he believes would be unimaginable in neighboring countries such as France.

“If [Theresa May] is so serious about taking back control, why has her government offshored the production of our new British passports to France?” he asked. “Workers in Gateshead were making them and that work has been taken away from that community.”

“Unsurprisingly the French aren’t queuing up to have their French passports made in Britain.”

— Posted workers —

Corbyn also expressed support for the free movement of workers — a core requirement for staying in the Single Market. “There are not enough workers being trained here in the UK to meet the potential demand,” the Labour leader said.

He has previously criticized “posted workers” who come to the UK from other EU countries and work for less than the going rate, pushing wages down or forcing UK workers out of a job. But last month the European Council revised the posted workers directive at the behest of France’s President Emmanuel Macron, effectively closing this loophole.

Pressure has been building on Corbyn from within the Labour party to soften his Brexit stance, with many of his own MPs pushing to keep the UK within the Single Market and offer a real alternative to Conservative policy.

The growing influence of pro-EU voices within Corbyn’s party could therefore be showing itself — even if it has to be dressed up in tub-thumping protectionist rhetoric.

And if a Labour prime minister turned up in Brussels touting a quick-fix Brexit deal of continued Single Market membership, in exchange for a declaration that his program of rail nationalization, steel subsidies and public procurement reforms were compatible with EU case law, who could refuse?

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