For years, Brexit has hovered over British politics like a stubborn fog, refusing to lift even as politicians of all stripes have tried to move on. But in the autumn of 2025, the Labour government under Prime Minister Keir Starmer has taken a bold, some say risky, step: making Brexit's aftermath a defining issue for the next general election and, perhaps, the future of the party itself.
Labour's new strategy is unmistakable. Rather than tiptoeing around the deep divisions left by the 2016 referendum, Starmer and his top ministers have begun to openly criticize the economic impact of Brexit—though they’re careful to lay the blame on the deal negotiated by former Conservative Prime Minister Boris Johnson, not on the act of leaving the EU itself. As reported by i Paper, this shift is most evident in the run-up to a tough Budget, with Chancellor Rachel Reeves warning that quitting the EU has led to a clear downgrade in the UK’s economic growth prospects. The Office for Budget Responsibility is expected to highlight trade barriers, introduced as a result of the Conservatives’ hard Brexit, as a key factor in the country’s sluggish performance.
“It isn’t about re-running the referendum and also I don’t think that’s what the public think we are saying,” a Treasury source told i Paper. “It is saying: if the country’s economy is less productive because of some of the trade barriers produced by Brexit, what are you going to do about it?” The government’s answer, for now, is to tout closer ties with the EU and new trade deals with India and the United States—agreements that Labour argues would be scrapped by a Reform UK or Conservative government.
Yet this is more than just economic messaging. Labour’s approach is designed to draw clear dividing lines with Nigel Farage’s Reform UK and the Conservatives, both of whom have promised to reverse the so-called Brexit reset deals. “You vote for these lot and we’ll go back to square one,” said a government source, as quoted by i Paper. The government is also keen to secure business support, defending recent trade deals and arguing that, while some business leaders are unhappy with policies like the National Insurance hike, they’re pleased with the direction of international trade under Labour. “Reform and the Tories would rip those deals up, they are opposed to them,” the source added.
This new posture, however, has not come without its share of internal disagreement. Reports of splits within Downing Street have surfaced, particularly over whether to focus criticism on the Brexit deal’s implementation or on Brexit itself. According to i Paper, a briefing to The Times that appeared to blame Brexit outright set off alarm bells in Whitehall. For now, the consensus among Starmer’s team is to keep the focus on the failings of the Johnson deal, not the referendum result.
Labour MPs, especially those representing the so-called Red Wall constituencies, have so far supported the shift. There has been no backlash from these critical Leave-voting areas, and government data reportedly suggests that voters are onside with the new message. Still, some pro-EU Labour MPs are pushing for a more ambitious plan to deepen trade ties with Brussels, possibly including a customs union—though no such ambitions have been formally announced yet. Stella Creasy, chair of the Labour Movement for Europe, told i Paper: “Recognising just how damaging Brexit has been means we must also recognise the scale of the challenge to repair it – that means the case for building on the work to date.”
At the same time, Labour’s approach is also very much about holding Nigel Farage and Reform UK accountable for the current state of affairs. Starmer’s international diplomatic efforts are being contrasted with Farage’s more divisive brand of politics. As one government source told i Paper: “Keir Starmer has put in the hard yards to improve Britain’s standing in the world. Compare that to Nigel Farage who can’t bring himself to have any relationship with Europe, and wants to see the country divided.”
But if Labour’s new Brexit messaging is meant to shore up its base and set the stage for the next election, the party faces a much more immediate and alarming problem: its own crumbling support in traditional strongholds. On October 23, 2025, Plaid Cymru delivered a historic blow to Labour by winning the Caerphilly by-election—a seat held by Labour for more than a century. Labour didn’t just lose; it came third, behind Reform UK and Plaid Cymru. As reported by The Independent, Sir Keir Starmer himself admitted to being “deeply disappointed” by the result, adding, “We clearly need to do much more.”
Pollsters are sounding the alarm. Ipsos’s Keiran Pedley told The Independent it’s “hard to see how Labour will turn things around,” while Professor Sir John Curtice declared, “Labour are in severe trouble in Wales.” The numbers are stark: Plaid Cymru’s Lindsay Whittle won with 47.38% of the vote, a swing of almost 27% from Labour. Reform UK’s Llyr Powell came second with 35.9%, and Labour’s Richard Tunnicliffe trailed with just 11%—the party’s biggest drop ever in a Welsh by-election.
The defeat in Caerphilly is seen as a bellwether for next May’s local and national elections in Wales and Scotland. The Andy Burnham-allied pressure group Mainstream warned that Labour “will be wiped out in Wales next May without a major reset,” urging Starmer to reject what they describe as a “hyper-factional culture” at the top of the party. One Labour MP went so far as to suggest that Starmer should “consider his position now, not later, before the Labour Party sinks into the abyss.”
Meanwhile, Reform UK is capitalizing on its momentum. The party swept to victory across more than half a dozen English councils in the 2025 local elections, winning hundreds of seats. While Reform fell short of winning Caerphilly, their vote share surged, and pollsters warn that tactical voting may have limited their success this time. Professor Curtice noted, “It does suggest that Plaid are now well placed to provide Wales with its next first minister. Reform will be disappointed at coming second, with 36 per cent, but I don’t think we should run away with the idea that this, in any way, suggests that Nigel Farage’s bubble is burst.”
Labour’s troubles extend beyond Wales. The by-election result has emboldened Plaid Cymru and is seen as a sign of what’s to come at next year’s parliamentary election. Rhun ap Iorwerth, Plaid Cymru’s leader, said the result shows that the people of Caerphilly have chosen “hope over division, and progress over the tired status quo.”
For Labour, the path forward is daunting. The party is trying to balance a new, more assertive stance on Brexit’s economic fallout with the urgent need to reconnect with disillusioned voters in its heartlands. As one party official told i Paper: “He [Farage] gets a free pass on so much, it’s about time we made him pay the piper for the tune he’s had us dance to. I accept there’s an element of peril in such a strategy but he really does get away with so much.”
With the general election looming in 2029 and local elections just months away, Labour’s gamble on Brexit—and its efforts to repair internal fractures—will be tested as never before. The stakes couldn’t be higher for Starmer’s government, which now finds itself fighting on two fronts: against resurgent rivals and the ghosts of Brexit that refuse to be laid to rest.
