NEW LABOUR IS TORY:

May's team can see how far off to the left Labour has moved under Jeremy Corbyn, taking positions that have distanced it from many of its traditional supporters. They are keen to take advantage of this.

But while Thatcher saw a Labour lurch to the left as an opportunity to pursue otherwise politically impossible policies, May views it as a chance to win over sections of the Labour vote. She is pitching herself at those who earn just more than the amount that qualifies you for benefits. She is also clear that she wants to reduce the wealth gap between London and the rest of the country. There are signs that this approach might be working; unusually for a Tory leader, May is more popular in the north than the south.

But the PM's own politics shouldn't obscure the fact that Brexit will move British politics structurally to the right. First, it will fully return immigration to the political centre stage. Parties will need to have a view on the appropriate level of EU migration and low-skilled migration. This, as Jeremy Corbyn's contortions over the issue show, will not be easy for Labour. The party's London base is far more relaxed about immigration than its northern heartlands, where concern about free movement drove support for leaving the EU.

Left-wingers might hope that the return of trade to the domestic political agenda will give them an opening. Those of a more populist bent dream of channelling the anti-globalisation anger that Bernie Sanders and Donald Trump tapped into during the US election. But that will be more difficult here. The UK's smaller but more technically advanced manufacturing sector is less vulnerable to competition from low-wage economies. And a recent poll suggests that only 8 per cent of voters want looser trade ties with China, compared with 43 per cent who want closer ones. Perhaps the British consumer's traditional desire for cheaper goods will drive public attitudes to future trade deals more than anything else.

But the big way in which Brexit will shift politics to the right is that Britain now needs to be globally competitive. Before the EU referendum we still had the (admittedly ignoble) option of managed decline inside the EU's walled garden. One former Cameron aide recalls how proposals to cut regulation or create tax incentives were often knocked back by officials with the line that Britain was already the best in the EU in this area. That kind of argument will no longer fly; we now have to be one of the most competitive countries in the world. This will exert a constant downward pressure on corporate taxes, especially with Trump determined to cut them in the United States. There will also be pressure not to raise personal taxes any higher than the other major financial centres.

This need to compete will be particularly acute if Britain does not sign a new EU trade deal. In these circumstances we would trade on World Trade Organisation terms. To compensate for the tariff barriers that would then exist between us and the rest of Europe we would have to become more competitive.

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