Labour must not just accept Brexit but embrace it | Larry Elliott

It is the only option that offers a way back for the party: then it can argue for a left version of Britain outside the EU

Modern Britain has been shaped by two events: the banking crisis of 2008 and the Brexit vote eight years later. The reason Boris Johnson is sitting in No 10 is that the Conservatives have learned the right lessons from these episodes and Labour has not.

The Tories have understood that their response to the financial meltdown – a prolonged period of austerity that squeezed living standards – was unpopular and wrong. They also twigged that Brexit was a revolt against austerity and free-market economics more generally – so they have embraced the decision to leave the European Union and positioned themselves as the party of intervention and the working classes.

Labour got the first part of this narrative but not the second. In this general election it sought to divorce austerity from Brexit – with disastrous results. Labour won seats in 2017 when it said it would respect the referendum result, but saw its “red wall” breached when it moved steadily closer to remain. Having chosen not to listen to what voters in its former heartlands were saying, Labour now seems bemused to find that they have migrated to a party that did.

Labour’s Brexit stance was not the only reason it lost the election. The number of seats won by the party has fallen, with one exception, at every election since 1997. Corbyn bucked the trend in 2017 and although he only managed to emulate Gordon Brown’s performance in the defeat of 2010, there was hope that Labour could avoid becoming as politically irrelevant as the social democratic parties in Germany and France. But to do so Labour had to keep its broad electoral coalition together.

The problem in doing so became evident as the campaign wore on. Voters in the former industrial parts of the country are not mugs. They could see that Labour’s stance on Brexit had moved from respecting the referendum result in 2016, to telling the public to have another think (and to come up with a different result) in 2019.

And when canvassing returns showed the likely loss of seats in the red wall, Labour made matters worse by coming up with a string of panicky, and expensive, electoral bribes. To many voters, these seemed an insult to their intelligence, which indeed they were.

All of which leaves Labour in a terrible place. It is not just that the Conservatives are in power for at least the next five years. It is not even that seats once thought impregnable have been lost. It is the failure – for a second time in a decade – to be able to exploit conditions that looked tailor-made for a party of the left.

The financial crisis marked a watershed for global economic liberalism, because its fundamental tenet – that markets worked best when governments took a back seat – came under scrutiny. Brexit was one of the ways in which the pushback against the orthodoxy manifested itself, but much of the remainer left in the UK has been unable to grasp this. Instead of seeing Brexit as a vote for a different sort of economy, it has demonised leave voters as nativists and racists. It decided early on that no matter what form Brexit took, it would be worse than the status quo.

This was a curious argument, because it presupposed that nothing ever changes: that there would be no new policies, no attempts to improve on what currently exists, no attempts to respond to any short-term problems that Brexit might cause. By this token, Labour’s national investment bank and its Keynesian infrastructure programme would have made no difference either.

Brexit has already been a catalyst for change. It has forced the government to spend rather than cut. The Conservatives are committed to increase both the minimum wage and have pledged to use the money saved by scrapping a planned reduction in corporation tax to spending on the NHS. The need for state intervention in the economy is now accepted: regional policy is back in vogue.

So Labour’s remainers face a choice. Option one is to move straight from supporting a second referendum to arguing for rejoining the EU. This is an entirely negative strategy and relies on UK voters looking at the dismal growth across the Channel and saying: “We want what they are having.” It seems a tad unlikely.

Option two involves grudgingly accepting that Brexit is a reality and that Labour’s approach should be to make the best of a bad job. This would be a continuation of Corbyn’s triangulation strategy and have the same baleful result. The message sent to leave voters would be the same as it has been consistently from remainers since 2016: you got it wrong, you idiots. This doesn’t seem to be a particularly good way of rebuilding the red wall either.

Strategy three is the hardest for remainers to swallow but it is the only option that offers a way back for Labour: embrace Brexit and argue for a left version of Britain outside the EU. This could take many forms: a devolution of power to local mayors; a new deal for the north; state support for green industry that would provide well-paid jobs in every constituency. It means exuding optimism that things can get better rather than telling people who are struggling, but not destitute, that only state handouts can alleviate their misery.

The choice is simple: start putting together a post-Brexit progressive project or have a monster sulk and watch the Tories make the political weather.

• Larry Elliott is the Guardian’s economics editor


Larry Elliott

The GuardianTramp

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