Jeremy Corbyn

Jeremy Corbyn

Business leaders have given a guarded welcome to Jeremy Corbyn’s announcement that the UK would stay in a permanent customs union with the EU after Brexit if Labour came to power.

In a move that sees new battle lines drawn between the opposition and the Tories over Brexit, Corbyn said keeping a union would avoid the need for a “hard border” in Northern Ireland and prevent cross-border chaos hitting trade, although he stopped short of a commitment to stay in the single market.

Prime minister Theresa May has insisted the UK would leave both the single market and the customs union after Brexit, which she says would allow it to build up its own independent trade deals across the world.

“Labour would seek a final deal that gives full access to European markets and maintains the benefits of the single market and the customs union with no new impediments to trade and no reduction in rights, standards and protections,” said Corbyn

Reacting to the Labour leader’s announcement, FDF director general Ian Wright said: “The leader of the opposition is correct to highlight the complexities of those supply chains, which rely upon on barrier-free and tariff-free trade.

“The success of UK food and drink manufacturers depends upon the frictionless movement of ingredients and finished products - nowhere is this more stark than on the island of Ireland, where food and drink can cross the border five or six times. Any delays at ports or border risk disruption to our ‘just-in time’ production, potentially adding costs and reducing choice for consumers and shoppers.

Carolyn Fairbairn, CBI director general, said: “The Labour leader’s commitment to a customs union will put jobs and living standards first by the UK remaining in a close economic relationship with the EU.

“It will help grow trade without accepting freedom of movement or payments to the EU.

“Growing trade is not an either/or question - Germany already exports five times as much with China as the UK from within the customs union. Many thousands of ambitious UK firms are looking to break into new markets. These companies need government to focus on making access to markets simpler, not putting up barriers to our most important trading partner.

“Importantly, a customs union will go part of the way to providing a real-world solution to the Irish border question that is of such urgent concern to the people and firms of Northern Ireland.

“This evidence cannot be ignored. To do so would create barriers where there are none, risking prosperity and future living standards.”