Jeremy Corbyn has said Labour would seek a comprehensive customs union with the EU after Brexit in a move that has been generally welcomed by business groups.
The CBI described Labour's proposals as a "real world" solution. Carolyn Fairbairn, CBI director-general, said: "The Labour leader's commitment to a customs union will put jobs and living standards first by remaining in a close economic relationship with the EU. It will help grow trade without accepting freedom of movement or payments to the EU."
This does not rule out trading with the rest of the world, she added. "Growing trade is not an 'either or' question - Germany already exports five times as much with China as the UK from within the customs union. Many thousands of ambitious UK firms are looking to break into new markets. These companies need Government to focus on making access to markets simpler, not putting up barriers to our most important trading partner."
Stephen Martin, director general of the Institute of Directors (IoD) said: "Many businesses, particularly manufacturers, will be pleased to hear the Opposition's proposal to keep a customs union on the table."
However, Martin added: "There are no easy solutions here. A full customs union would make life simpler for goods exporters, but it is not clear whether Jeremy Corbyn is proposing that Brussels negotiate trade deals for the UK even after Brexit. It is hard to see how the EU could simply extend its trade agreements to a sizeable non-member state without a fundamental revision of its Treaties. We advocate instead a partial customs union covering all industrial goods, in conjunction with a broader FTA for the many other areas that would be needed to ensure frictionless trade with the EU."
Dr Adam Marshall, director general of the British Chambers of Commerce (BCC), sounded a note of caution. He said: "Jeremy Corbyn's position on the customs union, like the Government's, feels more political than practical for business. The priority must be to delve far more into the detail and negotiate a pragmatic deal on both customs and regulatory recognition that allows businesses to get their goods across borders as quickly as possible. Westminster is still having an inward-facing conversation, when what businesses need is a clear understanding of how the UK's political establishment will deliver results in a tough negotiation with Brussels."
The IoD's Stephen Martin agreed. He said: "There are still many unanswered questions from both Labour and the Conservatives about the UK's future relationship with EU, and this is making it hard for businesses to plan."
Martin has called the Government and the Labour Party to work together. "Ultimately, we need a position on trade and customs that can garner a cross-section of support in Parliament, so we would urge the Government and the Opposition to agree a pragmatic compromise on a partial customs union approach as part of its wider negotiating objectives."