In a dramatic policy shift, Labour is pledging to continue UK membership of the EU single market and the customs union during a transitional period following Brexit in March 2019.
The party’s shadow Brexit secretary, Sir Keir Starmer, has also not ruled out negotiating the possibility of a new single market and customs arrangement on a permanent basis.
Effectively, a Labour government would try to keep Britain inside an economic union while leaving the political union with the European Union.
At the general election, Labour promised to seek to “retain the benefits” of the single market and customs union as part of a “jobs-first” Brexit.
But party leader Jeremy Corbyn has so far stopped short of committing to continued membership beyond the date of Brexit.
However, writing in The Observer, Mr Starmer said a Labour government would abide by “the same basic terms” of Britain’s current EU membership during the transition – which could last as long as four or five years.
The clarification of position by the opposition piles pressure on Prime Minister Theresa May and Brexit Secretary David Davis ahead of the resumption of talks in Brussels on Monday.
With a rump of Conservative MPs agreeing with Labour’s position, it is now unlikely the Government has a Commons majority to leave the single market during any transition period.
Mr Starmer wrote: “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.”
He added: “We will always put jobs and the economy first.
“That means remaining in a form of customs union with the EU is a possible end destination for Labour, but that must be subject to negotiations.
“It also means that Labour is flexible as to whether the benefits of the single market are best retained by negotiating a new single market relationship or by working up from a bespoke trade deal.”
Staying in the single market beyond March 2019 would mean the UK continues to abide by EU rules on free movement, accepts the jurisdiction of the European Court of Justice (ECJ) in trade issues, and pays money to Brussels.
Labour’s move came as David Davis lashed out at Brussels and demanded the European Commission be more “flexible” in negotiations on the UK’s withdrawal from the EU.
With the third round of formal talks beginning on Bank Holiday Monday in the Belgian capital, he is pushing for EU negotiator Michel Barnier to be less rigid in his refusal to discuss the post-Brexit relationship between the UK and Europe.
Mr Barnier insists progress must be made on key aspects of the withdrawal deal, including the UK’s “divorce bill”, ex-pat citizens’ rights and the Irish border, before there is any talk of future arrangements for crucial issues such as trade.
Britain wants to negotiate its future relationship with the EU alongside the divorce settlement.