Experts reject Labour Leavers’ fears that Brussels blocks state takeovers | Business

There is a group of Labour MPs who support a clean Brexit to break free from the shackles of a corporatist cartel that blocks state intervention.

Labour leader Jeremy Corbyn has long been sympathetic to the Labour Brexit – or “Lexit” – argument for the UK to leave the single market, if not the customs union, to escape a Brussels oligarchy that some believe has frowned on efforts by left-leaning governments to support individual industries or nationalise them to protect consumers’ and workers’ rights.

The often-cited example is the nationalisation of Britain’s banks, which was clearly needed after the 2008 financial crisis and yet had to be negotiated with the EU and renewed on several occasions. Unhappy with the continued state ownership of RBS, Brussels insisted on parts being sold off.

A Labour government that wants to nationalise the water, energy and rail industries would spend most of its time in Brussels defending these actions and most likely having them refused. Better to get out and gain complete autonomy.

Labour Leave backer Kelvin Hopkins, arguing against Labour policy and his leader’s official position in favour of staying close to the single market, has called Brexit a “necessary condition for a left government to be able to do what I think a left government should do”, which is to put the state back in the driving seat of economic recovery.

But a legal assessment of Labour’s 26 specific economic proposals by Andrea Biondi, director of the Centre of European Law at King’s College London, found that the effect of remaining inside the EU “would likely be negligible”. Writing with Andy Tarrant, a former Labour adviser on Europe, in the quarterly social democratic journal Renewal, she said: “Particular concern has been expressed by supporters of ‘Lexit’ concerning state aid rules preventing those parts of the Labour’s current programme which favour nationalisation.

“This is not the case; nor would Lexit in any event be a mechanism for avoiding state aid laws, which are requirements of World Trade Organisation membership and form part of the EU’s negotiating brief for any trade agreement with the UK.”

The EU has a policy that prevents a national railway monopoly, but this is to make sure a pan-European freight network thrives, which is something Labour supporters would probably back. Most European countries have a nationalised railway system.

French president Emmanuel Macron recently nationalised a shipyard jointly owned with an Italian rival to prevent the domestic firm losing control. He was able to press ahead with his protectionist measure under Maastricht and Lisbon Treaty rules that leave room for policy objectives for which state aid can be considered compatible.

Talk to EU officials and they are bewildered at the notion the EU is a one-size fits all club when there are many more social democratic, statist members than the UK. The European commission has estimated that its history of exemptions shows that more than three-quarters of submissions for state aid have been waved through.

Admittedly, there is work to be done, while inside the EU deals with all applications to get around state aid rules on a case-by-case basis, but this should not be too onerous once the UK has left the union and employed the legion of trade negotiators it will need just to deal with the trade issues and complaints currently dealt with by Brussels.

Nigel Driffield, professor of international business at Warwick Business School, says Brexiters on the right and left underestimate the volume of work and specialist trade negotiators that will be needed once the UK moves out from under Brussels’ umbrella.“The sheer number of civil servants needed to conduct trade policy is huge. In the 1970s something like 40% of all economics graduates were hoovered up by Whitehall to be sector specialists.”

Driffield says the temptation to rescue dying industries is another minefield.

“It’s completely insane to think the UK can subsidise industries and sell those goods abroad without the EU or anywhere else accusing us of dumping. The minute you rescue a steel works you are probably in breach of any trade deal.”

If Labour wants to increase UK exports, the tools are already available. In his book Failure to Adjust, Edward Alden, a fellow at the Council on Foreign Relations, says the left’s problems with globalisation are misplaced. Writing about the US, he says: “The problem has been the domestic political response to globalisation, which in too many ways has been deeply irresponsible. A central task of any government is to provide the tools to help people adjust and succeed in the face of economic change. However, the story of the last half-century has been the failure by governments to ease that adjustment.”

The failure of successive administrations to find ways to cushion those blows explains why US president Donald Trump’s anti-trade stance proved so alluring to voters. And the same analysis could apply to the UK, where insecure employment, low wages and rising levels of inequality are the source of anger, and not EU membership.

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