Updated

Published: 11:32 PM October 30, 2018 Updated: 6:12 PM September 17, 2020

John McDonnell has announced today's Labour Brexit policy: a customs union and a "close" relationship with the single market.

The shadow chancellor said Labour MPs would vote in favour of a Brexit deal which "protects jobs and the economy" - echoing Jeremy Corbyn's mantra of a "jobs-first Brexit" - but acknowledged that was "not the way it is at the moment" under Theresa May's strategy.

He was speaking after a meeting with senior business figures in the City of London.

Talking to reporters at Bloomberg's office in the City, he said: "The big issue really today was Brexit, where we are going from here."

Following the meeting with business figures he said: "We are as worried as they are about the uncertainty and the lack of assurance coming from government about a deal."

You may also want to watch:

He said Philip Hammond had to stand up in the Cabinet and say "there has got to be a deal", rather than "pandering" to the back benches.

A no-deal Brexit would be "pretty catastrophic", McDonnell said, and "we will support a deal that the government brings back if it protects jobs and the economy, simple as that".

Asked what the chances of that happening were, he said "not the way it is at the moment" due to Tory divisions.

"Our problem continuously is you never know who is in charge, you never know which faction is dominant from one day to the next."

McDonnell claimed business groups had backed Labour's approach to a transitional deal, a customs union and close links to the single market.

"We have got to secure a deal. A customs union, a close and collaborative relationship with the single market, I think there is a deal to be had.

"I think the Europeans will offer a deal, I think that would be acceptable to us on that basis.

"There is a deal to be had if the government sensibly negotiates."

Labour has said it would vote against any deal which did not meet its tests and would then call for a change of government in a general election.

If that did not happen, the party is open to the option of a second referendum on the terms of Brexit, with Parliament deciding whether the option of remaining in the EU is on the ballot paper.

Eloise Todd, chief of the anti-Brexit campaign group Best for Britain, said 'On whatever deal the government brings back, there are only a few certainties: we would still pay the EU a £39bn divorce bill and we would still be watering down citizens' rights.

"We would also be flying completely blindfolded on our future arrangements with the EU. The political declaration will barely be worth the paper it's written on: Brexiters like Gove have already said they would look to unravel the deal as soon as we are legally out of the EU.

"The Labour Party should vote down such a deal and demand a public vote with the option to stay and lead in Europe. That would give us the best chance to improve the lives of people across Britain through redressing the societal imbalances of the last decades and reforming Europe."