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Labour is the only party with “radical vision” to help Britain adapt to Brexit, the shadow chancellor has said.
Speaking at the party’s economic conference in Glasgow, John McDonnell described the government’s austerity measures as “criminally destructive”.
He also said Labour would hold a summit next month on helping self-employed workers who face a rise in National Insurance, under new government plans.
The formal process of Britain leaving the EU is expected to begin this week.
Mr McDonnell said the Brexit vote had created “huge challenges” and warned that “crashing out of the EU” would mean Britain would be cut off from investment.
“We will be cut off from our biggest trading partner. We will be cut off from the skills and contribution that EU nationals have made to our economy and society,” he said.
Calling for a “radically different approach”, Mr McDonnell called not only for devolution in Scotland and Wales, but also for the English counties and regions, which he said should enjoy greater freedoms.
The Labour leader Jeremy Corbyn has said it would be “absolutely fine” for Scotland to hold a second independence referendum.
The prime minister has set a deadline of 31 March for triggering article 50 of the Lisbon treaty which would start the formal process for Britain to leave the European Union.
‘Party of workers’
Mr McDonnell also further criticised Chancellor Philip Hammond’s announcement of a rise in National Insurance (NI) for some self-employed workers, unveiled in last week’s Spring Budget, saying it broke “a clear manifesto promise” not to raise taxes.
He said Labour “had always been the party of workers, of artisans” and would produce a “radical” plan to deal with the growing number of people who work for themselves in the so-called gig economy where short-term contracts are common.
He revealed that next month Labour will chair talks with unions, the self-employed and small businesses on how best to help self-employed workers, in the wake of the NI changes.
“The Chancellor’s decision to push a £2bn tax rise on low and middle-earner self employed made little sense.
“You can’t simply demand more taxes off people without offering something in return.”
A gig economy is an environment in which temporary positions are usual and organisations take out contracts with independent workers for short-term engagements.
Mr Hammond has faced a backlash over his announcement of a 2% hike in Class 4 National Insurance contributions for some self-employed workers, which would mean 1.6 million people paying £240 more on average every year.