Starmer to tell Davos he wants to fix post-Brexit relationship with EU
Labour leader Sir Keir Starmer will on Thursday tell the world’s financial elite in Davos that he wants to improve Britain’s relations with the EU, declaring the post-Brexit trade deal is damaging the UK economy “as every day passes”.
Starmer and Rachel Reeves, shadow finance minister, told the Financial Times they would rebuild the UK economy “on the rock of fiscal and financial responsibility” and through closer trade with the EU.
The leader of the opposition has ruled out taking Britain back into the EU or the single market but said the Brexit deal negotiated by former prime minister Boris Johnson in 2019 was deeply flawed. “It isn’t half baked. It isn’t baked. It didn’t work.”
Starmer will travel with Reeves as “ambassadors for the UK” to the World Economic Forum in Switzerland, in an example of Labour’s embrace of global capitalism. They also want to present a more optimistic vision for a country hit by strikes and sluggish growth.
Opinion polls have for several months had Labour well in front of the ruling Conservatives, ahead of an election expected next year.
Five years ago John McDonnell, the then shadow chancellor under leftwing Labour leader Jeremy Corbyn, went to Davos to tell bankers and bosses they were facing an “avalanche of discontent and resentment”.
By contrast, Starmer and Reeves will meet some of the titans of global finance, including senior executives from Goldman Sachs, Morgan Stanley, JPMorgan and BlackRock during their visit to the Swiss resort.
In a joint interview with the FT in the Labour leader’s Westminster office, Starmer and Reeves berated Rishi Sunak, prime minister, for not going to Davos this year and said they would be touting for investment.
Key for Starmer is revamping Britain’s post-Brexit EU relationship. The government’s own forecasters say that Johnson’s “bare bones” trade deal with the EU would cost the UK 4 per cent of gross domestic product in the medium term.
“The damage to our economy is obvious as every day passes,” he said. “We have to be clear that we want a closer trading relationship with the EU.”
Labour has already said it wants a veterinary deal with the EU to ease the most strenuous border checks on food.
The Labour leader said he would not take Britain back into the EU or the single market; he fears alienating the 30 per cent of his party’s supporters who backed Leave in 2016 and reopening old arguments.
Sunak on Wednesday accused Starmer of having abandoned his previous support for a second EU referendum and a restoration of free movement. “He is not just for the free movement of people; he also has the free movement of principles,” Sunak told MPs.
But Starmer insisted he could negotiate better terms with the EU: “When it comes to science, technology, research, there are grounds for a closer relationship, as there is in security.”
He said ending the row with the EU over Northern Ireland’s trading relationship would be a start; intensive talks between Sunak’s government and the EU are currently under way to end the simmering dispute.
However, the prospect of negotiating closer trading relationships with the EU will rely on more than just goodwill; the EU has shown itself unwilling to let third countries “cherry pick” parts of its single market.
The primary focus for any incoming Labour government — and the theme of Starmer’s message in the Swiss Alps — is to encourage international investment in the UK to help the transition to a greener economy.
“We’ve got to run towards renewables,” he said. “It does mean tough decisions. When it comes to planning, regulation, vested interests, we are going to front them down. We will run towards these problems.”
Starmer and Reeves said they want a partnership between government and business in areas such as carbon capture, tidal energy and green steel. Reeves talks about the “phenomenal impact” of Joe Biden’s $369bn Inflation Reduction Act.
Without government activism, she said that other countries would “steal a march on us and we’ll find in 20 years’ time we are importing all our cars, all of our steel, because we failed to seize that opportunity”.
The two senior Labour politicians are travelling to Davos with the intention of sending a message of unity at the top of their party. That has not always been the case.
“It is a signal about how aligned and close we are in our thinking. Almost every decision I have to take as leader of the Labour party, I will be taking in conjunction with Rachel,” Starmer said.
The last Labour government saw deep divisions between prime minister Tony Blair and Gordon Brown, his chancellor, who eventually moved to 10 Downing Street after a decade of debilitating feuding.
“We will take a totally different approach,” Starmer said, when asked whether an incoming Labour government would repeat the “TB/GB” psychodramas.
The pair’s relationship will be tested if they win the next election at a time of tight public finances. Jeremy Hunt, Tory chancellor, has pencilled in around £35bn of spending cuts in the two years after the next election and Starmer will be under pressure from his MPs to reverse them.
Starmer has admitted that some of Labour’s plans will have to be watered down or axed because of the state of the public finances, including a review of a flagship policy to scrap student tuition fees. A promise to return aid spending to 0.7 per cent of GDP would also have to wait.
Reeves has set fiscal rules that require all day-to-day spending to be funded through tax receipts and for overall debt to be falling as a share of national income. That still leaves some room for state investment.
“The UK’s reputation has taken quite a hammering in the last few years, certainly the last few months,” Reeves said. “We are determined to show that with a Labour government, Britain is very much open for business.”
Some on the Labour left believe Starmer and Reeves have gone too far in cosying up to business, risking becoming uncritical of bad practice in the hope of convincing voters they are serious custodians of the economy.
“I think we get the balance right,” Reeves insisted, citing Labour’s criticism of the labour practices of the P&O ferry company or the party’s advocacy of a windfall tax on energy firms, subsequently taken up by Sunak.
Asked whether Labour would be prepared to take on “big tobacco” and introduce an outright smoking ban — as hinted at by opposition health spokesman Wes Streeting — Starmer sounds cautious.
“It’s a conversation we need to have, but that will be in the form of discussions and consultations rather than a fixed position,” Starmer said.
The Labour leader is frequently accused by his critics — and by voters, according to focus groups — of attacking the government while refusing to set out his own position, for example on the wave of strikes hitting the UK.
“If we were in power we wouldn’t be saying in advance what our negotiating stance would be,” he says. Some Labour MPs would prefer Starmer to be bolder: a 20-point opinion poll lead over the Conservatives for now gives him a powerful shield against his critics.