UK Labor Party Shifts Toward Soft Brexit

Britain's main opposition Labor Party is announcing a policy shift and will seek to keep the country in the European Union's single market and customs union for several years as part of a "soft" Brexit, a spokesman said late Saturday.

The party would propose the same "basic terms" as Britain's current relationship with the EU during a transition period following Brexit in 2019, and after that for all options to be open, said the Labor spokesman, who declined to be named, Reuters reported.

He was confirming a report in Britain's Guardian in which shadow Brexit secretary Keir Starmer backed "continued membership of the EU single market beyond March 2019" in an attempt to offer a clear alternative to the Brexit currently proposed by Theresa May's Conservative government.

After months of uncertainty and division on Labor's position, this new offer is aimed at providing a springboard for Labor leader Jeremy Corbyn to potentially defeat the Conservatives at election. "We will always put jobs and the economy first," Starmer told the Guardian.

"That means remaining in a form of customs union with the EU is a possible end destination for Labor, but that must be subject to negotiations. It also means that Labor is flexible as to whether the benefits of the single market are best retained by negotiating a new single market relationship or by working up from a bespoke trade deal," he was quoted as saying.

Labor had previously been ambiguous on whether it would seek to retain single market and customs union membership, arguing only that it wanted a "jobs-first Brexit".

Starmer on Sunday dismissed "fanciful and unachievable" proposals set out by Brexit minister David Davis. He also warned about the government's "ideological obsession" with taking Britain out of all of the EU's structures when the country leaves the bloc in March 2019.

Corbyn's party would also "leave open the option of the UK remaining a member of the customs union and single market for good, beyond the end of the transitional period", the paper said, but only if Labor could by then have persuaded the rest of the EU to agree to a special deal on immigration and changes to freedom of movement rules.

Economy Suffering

Britain's economy suffered weakness on all fronts in the three months to June, with shoppers pinched by the pound's weakness on foreign exchange markets, exports failing to fill the gap, and business investment frozen by Brexit uncertainty, data showed.

The Office of National Statistics confirmed last Thursday the economy grew 0.3% in the second quarter after 0.2% in the first—adding up to the slowest growth for any major advanced economy since the start of 2017.

The data showed negligible growth in household spending and flat business investment.

A separate report suggested the malaise will continue. The Confederation of British Industry said retail sales growth slowed in August at the fastest pace in more than a year.

Meanwhile, business investment in the UK continued to stagnate in the year since the EU referendum. The level of business investment in the second quarter of this year was £43.8 billion ($56.52 billion), adjusted for inflation—virtually the same as the three months before last year’s EU referendum.

Businesses’ capital spending had steadily increased between 2009 and the end of 2015, but has been relatively flat since the third quarter of 2015.

The latest figures provide evidence for the argument that Brexit-related uncertainty has led businesses to delay spending decisions.

Earlier this month, Mark Carney, governor of the Bank of England, warned that persistent uncertainty over the UK’s future relationship with the EU was holding back business investment. The central bank governor said the unpredictable nature of Brexit was weighing on supply and demand, with some companies already delaying decisions about entering new markets.

May's attempts to settle on a position and start negotiating Brexit have been hampered by infighting in her own party following a botched early general election in June in which she lost her parliamentary majority.

Her position has been weakened and many believe she is unlikely to see out a full parliamentary term, although it is unclear who might replace her.