‘Remain Labour’ Press Release

February 12th, 2019


It could force Labour to impose ‘Labour Austerity’ and add 6p to basic rate of tax






New economic analysis, carried out by the Remain Labour campaign, reveals that the “Labour Brexit” proposed by Jeremy Corbyn in his letter to the Prime Minister would likely cost a future Labour government around £24 billion a year in lost income and could force it to impose “Labour Austerity”.


In a letter to Shadow Chancellor John McDonnell MP, Remain Labour points out that at £24bn a year, the estimated loss to the public purse is around three times the cost of Labour’s flagship policy in 2017 of scrapping tuition fees and is on the same scale as adding 6p to the basic rate of income tax.


The conclusions emerge from economic analysis published by the grass roots campaign group that helped lead the anti-Brexit charge at the Labour Party Conference in September and is highly attuned to the leadership’s evolving policy.

The £24bn a year is around half the increase of £44bn a year in public spending Labour promised in its 2017 manifesto. In a worst-case scenario, where the costs of Brexit are at the high end of expectations and Labour’s tax-raising plans fail to generate the as much additional revenue as forecast, the effect of a Labour Brexit could be to cripple the scope for spending increases and to force a future Labour government to impose Labour Austerity.


The figures will disturb the party’s leadership, MPs and party members as even the median estimate of £24bn a year suggests a future Labour government would be forced to ditch a wide range of anti-austerity policies that could include schools, welfare and pensions, childcare and the NHS.


The loss of revenue is partly a consequence of Labour’s apparent decision to drop the Brexit policy agreed at the party’s Conference of participating in the single market. The policy says it needs "a relationship with the EU that guarantees full participation in the single market". However, the letter Jeremy Corbyn sent to the Prime Minister setting out Labour’s position says he wants "close alignment with the single market". With economic cooperation reduced to ‘a’ customs union, many of the benefits of being associated with the EU are lost.


The letter also omits the 2nd test in Keir Starmer’s list of six, being outside the single market, the deal would not deliver the ‘exact same benefits’ as being members of the customs union and single market. The position now taken by Labour has been recently analysed in detail by economists at the London School of Economics and Kings College London. They concluded that after 10 years the public finances would be between 0.4% and 1.8% of GDP per year worse off than if the UK continued within the EU. Based on an estimate of the UK’s 2018 GDP of £2.1 trillion , this equates to a loss to a future Labour Chancellor of between £9 billion and £39bn per year with a median estimate of £24bn a year.


Andrew Lewin, founder of Remain Labour, said;

This analysis must serve as an urgent wake up call. If the party leadership chooses to pursue a ‘Labour Brexit’, the outcome will be Labour austerity. Brexit in any form will damage our public services, cost jobs and hit hardest those who have least. We must change course, have the courage to back a People’s Vote and campaign to Remain in the EU”.


Lewin concludes his letter to McDonnell by asking;

Can you please reply to confirm that as Shadow Chancellor you cannot back a plan that will cost our economy £24billion per year? I hope instead you will now support a People’s Vote and campaign to Remain in the EU.


To put these figures in context:

  • The cost of Labour’s higher education proposals, including both abolishing tuition fees and restoring maintenance grants, has been estimated at £9bn a year. Thus the cost of a Labour Brexit is likely around three times the cost of the revolution Labour had planned in higher education.

  • The Institute for Fiscal Studies estimated the cost of Labour’s welfare improvements at £4bn a year. Thus, the cost of a Labour Brexit is likely around six times the cost of Labour’s welfare improvements.


As one of the LSE/Kings authors, Jonathan Portes, told Remain Labour;

This is probably a fairly good approximation of what Labour policy would deliver – if free movement is not on the table. If, however, Labour were to accept free movement, at least in a modified form, that would open up the possibility of a much closer relationship, including for service trade, which would be far less damaging to the economy and public finances.


Even that may well be understating it. The IFS thought Labour’s 2017 tax-raising plans optimistic and suggested they might raise far less, especially in the long term. Combine that with a Brexit-inspired loss of income closer to 1.8% than 0.4% and Labour could find itself not increasing spending but cutting it. In short, a Labour Brexit runs the real risk of forcing the next Labour government to impose Labour Austerity.



1. Labour Brexit is the path to Labour Austerity and Labour Failure, Remain Labour Policy Briefing, February 2019.

2. IFS ibid.

3. The economists are from the Centre for Economic Performance (LSE) and the UK in a Changing Europe unit (Kings). Their report, The economic consequences of the Brexit deal, was published in November. They concluded that the damage to the UK economy from the kind of deal now proposed by Labour would be reflected in a significant fall in both GDP and GDP-per-capita and a consequent hit to public finances. The hit to public finances would massively outweigh savings from reduced budget contributions to the EU, as reflected in the net figures included here. http://

4. IMF World Economic Outlook Database, October 2018: pr.x=84&pr.y=9&sy=2017&ey=2018&scsm=1&ssd=1&sort=country&ds=.&br=1&c=112&s=NGDPD%2CPP PGDP%2CNGDPDPC%2CPPPPC&grp=0&a=



For more detail on the economic analysis please read our policy briefing HERE

For further information, contact:


Notes to Editors:

  • Remain Labour is a grassroots campaign founded with two clear objectives:

    • To campaign for the Labour Party to adopt a policy of supporting full British membership of the European Union, before Article 50 expires For that policy to be put to the British people, through either:

      • A manifesto commitment in any General Election that takes place before the expiry of Article 50

      • A referendum on the terms of an ‘exit deal’, with the referendum question including the option to remain full members of the European Union

  • Remain Labour members across the country proposed and passed motions in their local branches calling on the Labour Leadership support a People’s Vote on the Withdrawal Agreement and to campaign to Remain in the EU in that referendum. In total, it passed over 50 motions, taking 35 contemporary motions to the party conference in Liverpool where delegates drew up and overwhelmingly agreed Labour's Brexit policy

  • A majority of 2017 Labour voters supported Remain, a majority of Labour members supported Remain and a majority of Labour MPs supported Remain. Today, 86 per cent of Labour members want a referendum on the Brexit deal, the majority of Labour voters hold the same view.


  • Twitter: @Remain_Labour