The leader of GMB union, one of Labour’s biggest financial backers, has urged the party to have an “honest” conversation about the impact Brexit has had on the economy.
Gary Smith, the union’s general secretary, warned on Sunday that politicians across all parties had been too afraid to admit the adverse consequences that leaving the EU was having.
The GMB, which has more than 500,000 members, is one of the Labour Party’s donors, giving over £1m a year.
In an interview with The Observer ahead of the union’s annual conference in Brighton this week, Mr Smith insisted that he was not seeking a conversation about re-entering the bloc, but said that Brexit had hit investment and opportunities in the UK.
“There has been a lack of honesty and fear among politicians to face up to the impact that Brexit is having in terms of the economy,” he told the paper.
“In terms of what the future looks like, it needs to start from a position of honesty. It is hitting trade. It is hitting investment and we need a new settlement.”
Mr Smith continued: “We know that we are not going to be re-entering the EU. But we have to recognise that the frictions at borders are one of the factors behind inflation. It is bad for jobs and it is bad for investment.”
He cited concerns from pharmaceutical giant AstraZeneca about the impacts of Brexit on investment after the company’s chief executive announced last month that it was building its new $400m (£321m) plant in Ireland because of the UK’s “discouraging” corporation tax rate.
It comes after Labour leader Sir Keir Starmer pledged in an article in The Express last week that “Britain’s future is outside the EU” and that he would seek to “make Brexit work” if he became Prime Minister.
“Britain’s future is outside the EU. But the paper-thin Tory deal has stifled Britain’s potential and hugely weighted trade terms towards the EU,” he said.
Sir Keir added: “More than anything, British businesses and households need stability and certainty. They need us to use our sovereignty to benefit them, not as a tool to manage the Tory Party.”
The union chief has also warned that Labour’s plans to drive a new “green industrial revolution” through investment in wind, solar and tidal energy could cause job losses in the UK.
The proposal announced by Labour last week would ban new licences for oil and gas extraction in the North Sea but still allow existing projects to continue until 2050.
Speaking to Sky News on Sunday, Mr Smith said Labour’s policies “are going to create a cliff edge with oil and gas extraction from the North Sea” and that workers were “very worried” about the plans.
He said that the sector had been promised “tens of thousands of jobs” in renewable energy “time and time again” but that they “simply have not emerged”, adding: “That has been the sorry state of the renewables industry around the country.”
“I think workers in the petrochemical industry … are going to be very worried about what Labour are saying and I think it is time for Labour to focus on the right thing rather than what they think is the popular thing,” Mr Smith added.
But shadow business secretary Jonathan Reynolds defended the policy, telling the BBC that energy extraction in the North Sea would continue until 2050, protecting the 28,000 workers in the sector.
“But the big opportunity comes from the transition and we don’t think further new oil and gas fields are the answer,” he added.
“First of all because they won’t do anything for bills, they won’t do anything for our energy security, they cost a lot of public subsidy, they clearly will be a climate disaster, but also there are better alternatives available.”
The shadow business secretary said there is a need to be “embracing that change”, which includes renewables and green steel, adding: “The number of jobs that will be created by that is far in excess of the jobs currently there.”
