Labour offers business hope but uncertainty remains

Only Corbyn’s supposed landmark speech on Brexit does not feel like a defining moment that redraws the relationship between business and Labour.

True there was rare praise for the Labour leader from the CBI and from the Institute of Directors but it was tempered as Corbyn’s attempts to strike a new Brexit pose were largely political.

Labour remains in opposition. At this point Corbyn can offer whatever Brexit fantasy he likes, no one can hold him to it.

Yet the leader of the Opposition has risked alienating core working-class and largely Northern voters by offering a Brexit-lite option. After a year of essentially drifting – while building up his Momentum power base within the party’s machine – Corbyn has now adopted a best-of-both-worlds policy.

A life-long euro sceptic, he has struck a position that could precipitate a crisis for the Prime Minister, ahead of a crucial vote. Adam Marshall, of the British Chambers of Commerce, accurately described Corbyn’s statement as ‘more political than practical for business’.

Corbyn is hedging his bets but at least he is listening to business, unlike the Prime Minister who is mostly just listening to the hardliners in her own party.

Under Labour, we will be out of the EU and the single market, but in the customs union. Our aim would be to strike a better deal than Turkey’s with a greater say over trade policy.

Corbyn argued that free movement of people would end, but Labour would prioritise jobs and the economy ahead of immigration targets. He also wants the EU to weaken its state aid rules, which throws up a whole new area for negotiation.

A Labour government would still pursue international trade deals, alongside membership of a customs union. Trade deals with China and the US, were not so desirable, as they might encourage a ‘race to the bottom’.

Business lobby groups recognised that Corbyn had shifted towards their point of view, by prioritising a continuing close economic relationship with the EU.

But Labour’s movement is in imperial inches not metres.

Neither party can at this point give practical assurance to businesses about the post-Brexit world because we are so far from any resolution or policy implementation.

The long road of uncertainty stretches out ahead of British companies, large and small, for years. The best they can do, realistically, is ignore the overtures of Corbyn (and the rebukes from Liam Fox) and get their heads down and concentrate on their own business.

They know they need to make their own luck.

Corbyn has offered a sweetener to the Brexit pill, but not enough of a one to win over the uncommitted. Nor is the Labour cherry-picking approach enough to eradicate the obvious problems that a Corbyn-McDonnell government would create for business, with whole sectors (transport, energy, post, water) now threatened with renationalisation and the shadow chancellor preparing for a run on the pound, if elected.

Just to underline how cautious companies are becoming, lending to businesses fell by the largest margin in almost three years in January. Mortgage approvals for house purchases are also down 10% on last year.

On a brighter note, 20 months since Britain voted to leave the EU, sterling is close to pre-Brexit levels against the dollar.

Analysts are less concerned than they were about the UK’s future outside of Europe.

True they don’t have much clarity, but they no longer fear the worst.

May is primed to lay out her vision of a future trade partnership between the EU and the UK.

Corbyn’s skill has been to time his apparent policy reversal for maximum effect.