“Unless you know what the Olympic effect was you can't really say what this means"

Business quote of the day.

“Unless you know what the Olympic effect was you can't really say with any degree of accuracy about what this means for the overall recovery”

Peter Dixon of Commerzbank, as economists digest yesterday’s news that UK GDP has increased by 1 per cent in the last quarter. The government said this means the economy is “on the right track" but the Office for National Statistics have warned that figures had been artificially boosted by two short-term factors: the Olympic Games and June's extra bank holiday for the Queen's Diamond Jubilee.
 

Short term boost. Photograph: Getty Images

Helen Roxburgh is the online editor of Economia

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After the leadership battle, immigration is Labour's new dividing line

Some MPs are making a progressive case for freedom of movement controls. 

After three brutal months of infighting, culminating in another sweeping victory for Jeremy Corbyn, the buzzword at the Labour party conference is unity. But while Corbyn’s opponents may have resigned themselves at least temporarily to their leader, a new fissure is opening up.

Considering it was sparked by Brexit, the Labour leadership contest included surprisingly little debate about freedom of movement. In the immediate aftermath of the EU referendum, Corbyn declared he was “not afraid to talk about immigration”.  Owen Smith, his rival, referred to the “progressive case against freedom of movement”. But ultimately, the contest embodied a clash between the will of the membership and the parliamentary Labour party. 

Now, though, the question can no longer be dodged. What position should Labour take on freedom of movement? And is it time for a fundamental shift on immigration?

Labour’s 2015 pledge to “control immigration” was widely derided by its own party activists – not least when it appeared on a gift shop mug. Apart from making a rather authoritarian present, one of the flaws in this promise was, at the time, that the only way of really controlling immigration would be to leave the EU. 

But an increasingly vocal group of MPs are arguing that everything has changed. Heavyweights from the Miliband era are now, from the back benches, trying to define limits to freedom of movement and immigration. Chief among them are Rachel Reeves and Chuka Umunna. 

Reeves makes her case from an economic perspective. She argues that freedom of movement from the EU has depressed wages (the cause and effect is disputed). At a Resolution Foundation event during Labour conference, she recalled visiting a factory in her constituency where workers complained the jobs went to foreigners. 

Umunna, on the other hand, argues unease with immigration has a cultural element as well. He has said that immigrants need to stop leading “parallel lives”. At the Resolution event, he declared of Brexit: “This isn’t all about economic equality – it is about identity politics.” Umunna's tough talk on integration may coincide with his bid to chair the Home Office select committee, but his observations about the underlying distrust of immigrants rings true. 

How Labour copes with freedom of movement depends on which view prevails. It is possible to imagine the party coming up with an answer to the freedom of movement question that involves Corbynite economic themes, such as protecting wages, labour rights and restrictions on agency recruitment. Lisa Nandy, another speaker at the Resolution event, rallied the audience with a story of workers on low wages standing “in solidarity side by side” with migrant workers. It would be a distinctly left-wing argument that critiques the Government’s tolerance of zero-hours contracts and other precarious employment practices. 

But if, as Umunna suggests, Brexit is also an articulation of a deeper anti-immigrant feeling, Labour is entering more dangerous territory. On a tactical level, it is hard to see how the party can beat the May Government when it comes to social conservatism. It undermines any attempt to broker a "soft Brexit", which many of Labour's members, who voted Remain, will want. 

And then there's the prospect of the party most closely associated with ethnic minorities condoning xenophobia. Labour activists point out that some of the Brexit backlash is plain old racism. Speaking at a Momentum rally during the leadership contest, Diane Abbott, the shadow health secretary and one of Corbyn’s closest allies, declared: "Anyone who tells you maybe you have to do something about these Eastern Europeans, it's not about skin colour, what we've seen since the Brexit vote gives lie to that. 

“If you give ground to anti-immigrant politics, it will sweep away all of us. And we cannot give ground to that stuff. You cannot as a Labour movement take a position that one part of the working class is a problem of another section of the working class."

More pragmatic MPs too, still remember the ill-fated immigration mug. They see the new “tough on immigration” line as an uneasy alliance between working-class MPs on the Labour right, and a group of middle-class metropolitans who have spotted a gap in the market and jumped on it. Should this second attempt, Labour MPs will have achieved nothing except alienating their activist base. 

Ultimately, the initiative lies with Corbyn. If he can set out a radical agenda for protecting workers’ rights, he may be able to bring the party with him. But if this fails to shift opinion polls, immigration could be the next issue to disunite the party.