Deputy prime minister David Lammy has suggested that rejoining the European Union’s customs union could increase economic growth – as ministers increasingly hit out at the financial damage caused by Brexit.
Mr Lammy refused seven times in an interview to rule out reversing Brexit, arguing that leaving the EU badly damaged the UK economy and saying Labour should consider closer integration with Brussels.
The OBR forecasts that leaving the EU will reduce long-run productivity in Britain by 4 per cent.
Before the Budget, chancellor Rachel Reeves said Brexit had an even bigger impact on Britain’s economy than critics predicted.
Mr Lammy said that rejoining the customs union was not currently government policy but that it was self-evident that other countries had seen growth after doing so.
Health secretary Wes Streeting said on Wednesday that Labour should undo “the economic damage done by Brexit”.
Baroness Shafik, prime minister Sir Keir Starmer’s chief economics adviser, and some senior figures close to No 10 are also reportedly pushing for closer ties with the EU.
Ms Reeves said in October: “Things like austerity, the cuts to capital spending and Brexit have had a bigger impact on our economy than even was projected back then.
“That’s why we are unashamedly rebuilding our relations with the European Union to reduce some of those costs that were, in my view, needlessly added to businesses since 2016 and since we formally left a few years ago.”
Labour’s manifesto pledged not to rejoin the single market or customs union but pressure over the issue is mounting from MPs and advisers following poor growth forecasts.
Mr Lammy, who is also justice secretary, was asked on the News Agents podcast about the idea of being part of the customs union again, said: “That is not currently our policy. That’s not currently where we are.
“But you can see countries like Turkey with a customs union seemingly benefiting and seeing growth in their economy, and again, that’s self-evident.”
He added that his comments were “subject to collective responsibility”, implying that he should follow Sir Keir’s position.
But Darren Jones, Sir Keir’s chief secretary, rebuked Mr Lammy in the Commons, saying that Labour’s policy would be announced in Parliament, not “on podcasts”.
