LONDON — Britain’s Labour Party has gone full Bidenomics — just don’t call them protectionist.
With the appointment of Jonathan Reynolds as shadow business and trade secretary, the U.K.’s main opposition party — on course to win the next election on current polling — is leaning in to the interventionist approach on trade taken by U.S. President Joe Biden.
“I would strongly push back on the idea that we are protectionist in policy outlook,” Reynolds told POLITICO in a wide-ranging interview.
“But I do think the world has just changed and we’ve got to reflect that. What are you going to do? Are you going to team up with China and go to the World Trade Organization (WTO)? That’s not an option.”
The party’s plan to spend up to £28 billion on green infrastructure is just the most eye-catching part of an ambitious agenda to localize supply chains in key technologies, reduce reliance on hostile states, and prioritize narrow sector-specific trade deals over traditional, wide-ranging agreements.
It’s a strategy that seeks to make trade a more deliberate tool of foreign and industrial policy. Reynolds sees that as imperative to not only revive Britain’s industrial capacity after decades of decline, but also protect its economy from big geopolitical risks.
And it’s also a strategy directly influenced by Biden — something openly acknowledged when Reynolds unveiled his aspirations in one Labour’s key business-facing jobs in a speech earlier this month.
Where Joe goes
Under Conservative governments, Britain’s post-Brexit trade policy has focused on using its newfound trade freedom to strike traditional deals with allies including Australia and New Zealand, as well as joining the 11-nation Indo-Pacific CPTPP trade pact. It’s sparked a big debate in the U.K. about just how economically open to be.
“We must not be naïve and choose protectionism where it appears to suit us,” Britain’s Business and Trade Secretary Kemi Badenoch said last week, adding the U.K. was “pursuing the most ambitious program of trade negotiations in the world.”
But that’s exactly the kind of approach which has been shunned by Biden, who has made it clear that the U.S. is not interested in signing comprehensive free-trade agreements.
Instead, through policies such as the the Inflation Reduction Act (IRA), Biden has sought to re-industrialize and de-carbonize the economy through massive subsidies, causing other countries to complain that they are being shut out of America’s massive markets.
In a landmark speech in April, Biden’s national security adviser Jake Sullivan said the U.S. would “unapologetically pursue our industrial strategy at home,” but added: “We are unambiguously committed to not leaving our friends behind — we want them to join us.”
Reynolds, who was appointed to his current role in August, needs little convincing this is the way to go.
Reynolds name-checked Sullivan several times in his own Canary Wharf speech — and he’s quick to bring the national security adviser up in conversation.
“The line between domestic industrial policy and foreign policy is not an easy one to define,” the Labour business and trade chief says. But one thing is clear: Labour’s plan is not “the globalization of the 1990s.”
It is a trade strategy which fits hand-in-glove with the type of cautiously expansionist economic policy being pushed by Labour Leader Keir Starmer and Shadow Chancellor Rachel Reeves.
“I think when the U.S. makes a decision like this, it has an impact — there’s no doubt about that,” Reynolds said of Biden’s strategy.
“The disruption to capital markets and investment the IRA represents is very significant, but we shouldn’t be too negative about the better mix of … what we call a Green Prosperity Plan and regulatory changes that could compete with that.”
This could include mandating the use of local supply chains for industrial projects to ensure the full economic benefit of the green transition is felt by British workers, Reynolds suggested — a stark contrast to decades of U.K. policy that has allowed local industrial capacity to shrink in favor of cheaper foreign imports.
“I’ll give an example of a potential Chinese investment into a gigafactory. Okay, you want a subsidy for that — what’s the local supply content you’re putting in place as a part of that deal?” Reynolds says.
“I wouldn’t describe it as either being ‘we want everything in the U.K.’ or that ‘we’re totally free with a free flowing global system’.”
It would be a change of approach welcomed in Washington, according to Biden’s former trade and economics adviser Peter Harrell.
“You actually need a strong industrial policy, not only in the U.S., but across Western industrial countries,” Harrell said. “It is very sincere on the part of the Biden administration that they welcome other countries doing this.”
The White House “would want to talk about preventing subsidy races to the bottom,” Harrell added.
Global stage
The threat posed by China has loomed large in U.S. efforts to bring critical supply chains closer to home, as well as the desire to out-compete its geopolitical rival in key industries of the future.
The U.K. and the EU are following a similar direction by trying to move supply chains for critical minerals, used to make things like electric vehicle batteries, away from China.
However, U.K. Prime Minister Rishi Sunak is also trying to boost bilateral trade and investment with China in less sensitive areas of the economy — a strategy Labour endorses.
Reynolds say he wants to go further by integrating trade more deeply into foreign policy, with a greater alignment between the Department for Business and Trade and the Foreign Office.
A City figure who has heavily influenced Reynolds’ trade policy, and was granted anonymity for this piece, said: “Trade can’t be a standalone item — it needs to be embedded through all international and domestic policy.”
“It needs to run all the way through Whitehall.”
Reynolds, one of the broadcast media performers most trusted by Labour HQ, may just fancy himself as Labour’s globe-trotting face of the blue collar progressivism espoused by Starmer and Biden.
“The one thing that Jonny really has from Keir and LOTO is trust. They’ve let him take this direction because they trust his judgement and they know he wants to say something substantive in this brief,” a Labour official said.
Looking ahead
For all the positive messaging, the stark reality of government may be very different if Labour wins next year’s election.
Shanker Singham, chief executive at consultancy Competere and once an informal trade adviser to Tory Liz Truss, said Labour’s rhetoric is overblown and that the party would find it difficult to move the dial very much in government.
“On subsidies, they’ll have to contend with the U.K. subsidy control regime” and the post-Brexit EU trade agreement, he said, which could tie a Labour government’s hands. Overall, “not much will change.”
There is also the question of whether Bidenomics will remain electorally successful in the U.S., according to Starmer’s former chief of staff Chris Ward.
Recent polling indicates that presumptive Republican candidate Donald Trump is in line to win a swathe of swing states that would deliver him the presidency next year.
“If the electorate rejects [Bidenomics] in America, that puts them in a difficult position,” Ward told POLITICO’s Westminster Insider podcast.
“Does that mean Starmer and Reeves now suddenly say, ‘actually, do you know what? That kind of approach isn’t the right one?’”
It’s a scenario which Reynolds, who has only known opposition since entering parliament in 2010, is desperate to avoid.