The leader of one of the country’s biggest unions has urged Labour to conduct an “honest debate” about the economic damage being caused to working people by Brexit, as evidence grows that it is fuelling inflation and driving jobs and investment abroad. In an interview with the Observer, Gary Smith, the general secretary of the GMB union, which is one of Labour’s biggest financial backers, giving more than £1m a year, said politicians of all parties had been too afraid to admit the adverse consequences that leaving the EU was having on jobs and life in working communities. “There has been a lack of honesty and a fear among politicians to face up to the impact that Brexit is having in terms of the economy,” said Smith, whose union has more than 500,000 members across the UK. “In terms of what the future looks like, it needs to start from a position of honesty. It is hitting trade. It is hitting investment and we need a new settlement. “We know that we are not going to be re-entering the EU. But we have to recognise that the frictions at borders are one of the factors behind inflation. It is bad for jobs and it is bad for investment.” The GMB leader cited warnings from the drug giant AstraZeneca – which employs many GMB workers – about its future investments in the UK in the post-Brexit era, saying he worried that the company would switch production to the EU if it found trading and tax arrangements were more favourable there. Smith’s comments echo frustration among pro-EU Labour backers and supporters at the party’s reluctance to do more to expose Brexit’s failings or advocate a clearer plan for a closer relationship if it wins the next election. Some senior Labour strategists fear alienating its many backers who voted to leave the EU in the 2016 referendum. In an article in the Daily Express last week, Keir Starmer attempted a delicate balancing act, trying to reassure the paper’s overwhelmingly Tory-supporting readership that he would not take the UK back into the EU or single market, while also making clear that the Brexit deal negotiated by Boris Johnson’s government had not worked and would need to be revisited. “Britain’s future is outside the EU,” Starmer said, despite having been the most senior Labour figure most in favour of holding a second referendum on membership before becoming leader. “Not in the single market, not in the customs union, not with a return to freedom of movement. Those arguments are in the past, where they belong,” he said, while adding that “there’s no point pretending that everything is working fine”. Ahead of the GMB annual conference in Brighton this week, Smith said he had been encouraged by much that Labour’s shadow chancellor, Rachel Reeves, had said about the party’s economic agenda for government, including its plans to foster a new “green industrial revolution” through investment in wind, solar and tidal energy. But, as with Brexit, he was concerned that the drive to more renewable energy – and the expansion of nuclear – under the Conservatives had so far merely created jobs abroad rather than here in the UK. Under Labour, there needed to be a “new settlement” involving the unions, with guarantees that employment would be created in the renewable and other sectors in this country. “We have some of the biggest windfarms in the world but almost no jobs in fabrication and manufacture of the windfarms. “The windfarms off the east coast of the UK have been produced in China and Indonesia, and by Middle Eastern sovereign oil- and gas-backed wealth funds.” Smith’s intervention is evidence of the unions wanting to play a role in shaping Labour’s economic policy ahead of a general election expected next year. What was needed from Starmer and Reeves, Smith said, was an economic vision as radical as that produced by the US president, Joe Biden, which ensured that green investment projects were linked to domestic production and home-grown job creation: “We do not see ourselves as having political saviours,” said Smith, “but we do want a Labour government and I want to see a proactive industrial strategy from Labour that actually safeguards what we still have in terms of manufacturing jobs, and which does support the creation of work in any green transition.” The GMB leader has not been afraid to criticise Labour in strong terms. He repeated his attack on the party for saying it would ban future North Sea oil and gas drilling, describing it as “naive”. Smith claimed that it would mean importing more oil and gas from abroad and cost jobs in coastal communities. But despite flexing his muscles, he was clear that a Labour government would be massively preferable to another Conservative one. “The Tories are trying to break organised Labour with their anti-union legislation …. There is no national economic plan and our public services have been starved of investment. And, after 13 years, what we have got is Tory squalor in the public services. “The lack of industrial strategy, the lack of an industrial plan, has done enormous damage in terms of investment and opportunities.”