Almost a decade on from the UK’s vote to leave the European Union, Brexit is back on the agenda for Prime Minister Keir Starmer’s Labour government as it tries to fend off the threat from Nigel Farage.
Members of Starmer’s administration are starting to argue privately for him to break with past caution on Brexit and make a premiership-defining decision to take the UK much closer to the EU, according to people familiar with the matter who spoke anonymously about internal strategy.
Lng-term hit to economic output
With the Office for Budget Responsibility estimating that Brexit is responsible for a 4% long-term hit to economic output, the calculus of those proposing a more radical approach to the EU is that it will help spur the growth that Starmer has said is his government’s top priority.
Further steps to ease trade flows and more closely align on regulation could deliver a meaningful benefit ahead of the next election, they said. Moreover, the pivot would help shore up Labour’s vote in the face of threats from the left and center, rather than attempting to fight Farage on his own turf.
New deputy leader
The news comes on the same day that Labour members elected Lucy Powell as deputy leader, highlighting internal dissatisfaction with the governing party’s direction amid dire opinion poll ratings.
Powell won 54% of the vote in the six-week contest, beating her opponent, Education Secretary Bridget Phillipson, who secured 46%, according to results announced on Saturday by Labour. She replaces Angela Rayner, who resigned in a tax scandal last month.
“People feel that this government is not being bold enough in delivering the kind of change we promised,” Powell said in her victory speech on Saturday, adding that the stakes were high when it came to challenging Farage’s Reform.
As a member of the cabinet, Phillipson was viewed as Starmer’s preferred candidate who wouldn’t challenge the leadership, even as Labour languishes in the polls, trailing Reform since April. Powell, by contrast, was sacked from the cabinet by the premier just days before nominations opened for the deputy’s contest, and she ran on a platform calling for Labour to change its approach by pandering less to the anti-immigration vote that’s core to Farage’s support.
Appeal to the core
“It potentially helps with that disillusioned progressive flank who sort of secretly hoped despite Labour’s manifesto that they would undo at least some major elements of Brexit,” said Luke Tryl of the pollster More in Common. “Picking a fight on Brexit motivates this group.”
It wasn’t long ago that Starmer, who campaigned for the UK to remain in the bloc and backed a second referendum to try to reverse the 2016 vote, was loath to talk Brexit. Accepting the decision to leave was seen by his aides as essential if Labour was to win over working-class voters at the 2024 election. He made clear his red lines: no return to the EU, its single market or customs union.
In addition, Starmer’s chief of staff and closest aide, Morgan McSweeney, has been wary of re-litigating the Brexit fight, believing Labour cannot afford to push working-class voters toward Reform, which has led national polling since April.
However, in recent months Starmer has increasingly taken on board advice from those who helped run campaigns for a second referendum and to rejoin the EU, according to the people. The more critical stance on Brexit in recent weeks — including blaming the rupture for the need to raise taxes — has been an attempt to see how a broader pivot might land politically, they said.
Welsh litmus test
Some proponents for closer EU relations worry that focusing too much on voters tempted by Reform risks losing the support of working- and middle-class liberals and left-wing voters to the Liberal Democrats and Green Party, as well as nationalists in Wales and Scotland.
Plaid Cymru’s victory over Reform in a by-election Thursday showed there is a coalition of tactical voters who wanted to stop Farage from winning power by backing parties with more progressive policies, one of the people said. Plaid leader Rhun ap Iorwerth has acknowledged that other parties’ supporters lent his party votes to keep Reform out.
In the background are polls showing Britons are increasingly disillusioned with Brexit. In a YouGov survey for Best for Britain this week, 62% of voters said the divorce has been more of a failure than a success, with most saying it had damaged the economy. Redfield and Wilton polling last year showed some 74% of “loyalists” who backed Labour in both 2019 and 2024 would vote to rejoin the EU.
The change in tone within Labour has been on display in recent weeks. Chancellor of the Exchequer Rachel Reeves has sought to blame Brexit for a looming productivity downgrade at November’s budget, arguing it means she has to raise taxes. Health Secretary Wes Streeting said this month that he’s glad he could now admit Brexit is a “problem.”
Needled in the House
Liberal Democrat leader Ed Davey, whose party supports rejoining the EU in the longer term, needled Starmer on the issue in the House of Commons this week, saying he knows “Labour members are relieved” to call Britain’s exit deal a disaster. “Will the Prime Minister act now to repair the Brexit damage by negotiating a new UK-EU customs union to boost Britain’s trade and grow our economy?” Davey asked.
But Starmer wasn’t prepared to abandon his red line. “No, I do not think that is the way forward,” he replied, citing his efforts build a “much closer relationship with the EU,” a reference to a deal signed between the two sides in May. That much-vaunted “reset” has been seen by some in Downing Street as a half-measure that only tinkered around the edges and made little material difference to the economy.
Starmer could end up in a place where the UK re-enters a form of customs union with the EU under a a different name if political circumstances allowed, the people said, with one adding that in his heart, that is what he wants to do. That was originally seen as a second-term project, but the premier’s struggles to find growth and maintain public support may mean it has to be accelerated, they argued.
There has already been a shift in Starmer’s attitude to a youth mobility programme, from being wary of upsetting voters by boosting immigration to viewing it as helping growth and business. Some officials also argue that only through a closer partnership with Europe will the government be able to stop asylum seekers crossing the English Channel in small boats.
There are geopolitical reasons for seeking closer ties, too. US President Donald Trump’s tariffs have seen the UK benefit slightly in terms of reduced rates compared to the EU, but Europe is viewed as a more reliable trading partner. Starmer’s efforts to thaw relations with China have stuttered as well.
Nonetheless, others close to Starmer are wary of overdoing the Brexit pivot, either in terms of rhetoric or a wider policy rethink. They are concerned that Farage could exploit it especially by arguing that it means Labour would be softer on immigration.
“There is very definitely likely to be a penalty for whichever side is seen to bring Brexit rows back to the fore, if it’s not coupled with actual solutions on the big issue which remains cost of living,” Tryl said.
There’s also a messaging problem. Former Labour shadow chancellor Ed Balls summed up the current approach on his Political Currency podcast as “saying, ‘Well, the problem is Brexit, but, by the way, we’re not going to reverse Brexit.”
“I don’t quite see the story yet,” Balls said. “It doesn’t fill that gap.”
