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Labour government acknowledges Brexit's economic toll
Chancellor Rachel Reeves declared Brexit had caused "deep damage" during a Tuesday lecture, marking a notable shift in the UK government's rhetoric on its relationship with the European Union. While ruling out a return to the single market or customs union, Reeves emphasized the need for a "deeper relationship" with Europe to boost Britain's sluggish economy.
Economic pressures drive policy rethink
Reeves' comments reflect growing frustration within Labour over the UK's economic performance, which grew by just 1.3% in 2025-an improvement from 1.1% in 2024 but below official forecasts of 1.5%. The government has tied its economic revival plans to closer alignment with EU regulations, particularly in trade and agriculture, to reduce barriers for British exporters.
Labour's 2024 manifesto initially proposed renegotiating the Trade and Cooperation Agreement (TCA) negotiated by Boris Johnson, focusing on eliminating customs checks for food and agricultural exports. However, the party maintained firm red lines against rejoining the single market, customs union, or restoring freedom of movement.
Internal divisions over Brexit strategy
While Reeves stressed that Labour's manifesto commitments remain intact, other senior figures have adopted a more critical tone. Health Secretary Wes Streeting acknowledged Brexit as a "problem whose name we now dare speak," while Deputy Prime Minister David Lammy highlighted Turkey's economic gains from its EU customs agreement. London Mayor Sadiq Khan went further, urging the UK to rejoin the single market and customs union before the next election.
"This government believes a deeper relationship is in the interest of the whole of Europe," Reeves said, while insisting Labour was not attempting to "turn back the clock."
Rachel Reeves, UK Chancellor
Electoral risks and shifting voter loyalties
Labour's evolving stance on Brexit carries political risks. Polls show the party's support has plummeted to 19% this month, trailing the pro-Brexit Reform UK by eight points. However, analysis suggests Labour's losses are not primarily driven by defections to Reform. Instead, nearly twice as many former Labour voters have shifted to the pro-EU Greens and Liberal Democrats, who advocate rejoining the EU.
Data from the British Election Study and the National Centre for Social Research reveals that 80% of Labour's 2024 voters supported rejoining the EU, compared to 86% in 2019. The party's limited progress in winning back working-class Leave voters-who helped deliver Boris Johnson's 2019 victory-has further complicated its strategy.
Public opinion remains divided on trade-offs
While Labour's proposed veterinary agreement to remove food export checks enjoys broad support among its voters, polling highlights sensitivities around regulatory alignment. A January 2025 BMG survey found 63% of Labour voters backed the agreement, but a Redfield & Wilton poll the same month revealed a narrow 45-40% preference for aligning with EU food regulations over maintaining UK sovereignty.
Critics, including Reform UK and the Conservatives, are likely to frame Labour's reset as a betrayal of Brexit, arguing it would force Britain to follow rules set in Brussels. Professor John Curtice of Strathclyde University noted that Labour's challenge lies in persuading voters of the benefits amid competing narratives.
Future prospects and political calculations
Labour's strategy assumes that a closer EU relationship will satisfy pro-EU supporters without alienating Brexit-backing voters. However, with 73% of Labour voters supporting negotiations to rejoin the EU in a December 2025 YouGov poll, the party's cautious approach may struggle to retain its base. The government's ability to deliver tangible economic improvements could determine whether its reset succeeds-or faces backlash from both sides of the Brexit divide.
