BREXIT: Labour U-turns on single market as businesses call for focus on shared interests

The British Chambers of Commerce and the Association of German Chambers of Commerce (DIHK) said negotiations should focus on “business-critical areas” such as the rights of workers, customs arrangements and tax procedures.

The statement came as Labour's shadow Brexit secretary Keir Starmer said the party would campaign for the UK to stay inside the EU's customs union and single market for a “transitional phase” after the UK withdraws in March 2019.

Writing in The Observer, Starmer said: “Labour would seek a transitional deal that maintains the same basic terms that we currently enjoy with the EU. That means we would seek to remain in a customs union with the EU and within the single market during this period. It means we would abide by the common rules of both.”

Starmer said it was unlikely that transitional arrangements would be negotiated in the next 18 months and this approach would provide certainty for business that there would be no delays or disruption to trade once the UK had left the EU.

The comments are Labour's first commitment to the single market since Brexit negotiations began.

Earlier this year prime minister Theresa May said the UK would be leaving the single market as it exited the EU. She said the UK would seek to gain access to EU trade via a “new, comprehensive, bold and ambitious free trade agreement”. However the terms of any such agreement remain unclear.

DIHK chief executive Martin Wansleben said the organisation's members were already shifting investments away from the UK in anticipation of trade barriers and that German exports to the UK had dropped.

“A transitional period would be helpful for business, but it is important to businesses on both sides that the contours of a future trading relationship are becoming clearer over the next months,” said Wansleben.

Business organisations have repeatedly called on the government to engage with their interests during the course of Brexit negotiations.

The Scottish government has also repeated calls for the UK to remain in the single market. In a statement the Scottish minister for UK negotiations on Scotland's place in Europe, Michael Russell, said “no deal” with the EU was “an unthinkable outcome”.

“We strongly believe the best long-term option, short of EU membership, is to remain in the European single market and customs union. This is essential for Scotland’s economy. A commitment from the UK government to achieving that would enable negotiators to move on to other important measures, such as cooperation on justice and security, and collaboration on science and innovation,” Russell said.