The Labour Government faces rising internal dissent as plans to deepen trade ties with "Israel" spark outrage among MPs, donors, and voters concerned over the war on Gaza.

The Labour Government is facing a widening internal split over its push to secure a new trade deal with "Israel", with senior figures and grassroots supporters condemning the move as morally indefensible amid the ongoing Israeli assault on Gaza.

In a statement last week, Business Secretary Jonathan Reynolds confirmed that the government had “ambitions to secure further agreements” with "Israel", Switzerland, and South Korea. The announcement came on the heels of trade deals signed with India and the US, but Reynolds’ inclusion of "Israel" has sparked sharp backlash from within Labour’s ranks.

Last September, the Labour government suspended 30 of the 350 arms export licenses to "Israel", citing concerns that the equipment might be used in ways that violate international humanitarian law.

The UK government is currently facing accusations of dishonesty after an investigation revealed that thousands of weapons were still shipped to "Israel", despite a declared suspension of arms exports. The disclosures have prompted demands for transparency, a formal inquiry, and even potential resignations. The revelations stem from an in-depth review of Israeli customs data by the Palestinian Youth Movement, Progressive International, and Workers for a Free Palestine, in findings first reported by The Guardian. 

Gaza war prompts calls to cancel trade talks

Dale Vince, a prominent Labour donor who contributed £5 million before the general election, called the proposal “shameful” and urged the government to “pull the trade deal and impose sanctions” on the Israeli regime.

“We shouldn’t have a trade deal. We should have trade sanctions,” Vince told The Telegraph. “I find the contrast between how we treat Russia and how we treat "Israel" to be quite incredible. It gives legitimacy to a regime that is literally terrorising millions of people in Palestine every day.”

Several Labour backbenchers have joined the call to suspend negotiations, citing the worsening humanitarian crisis in Gaza.

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Kim Johnson, MP for Liverpool Riverside, said, “It is morally indefensible for the UK to pursue a new trade deal with Israel while the bombardment of Gaza continues, inflicting devastating human suffering. These talks must be paused immediately, and we must prioritise using every diplomatic lever to demand a ceasefire and the full protection of civilians.”

The government says it opposes Netanyahu’s ethnic cleansing plan - but has allowed thousands of military items to go to Israel, despite a supposed export ban.

While Gazans starve, UK arms still flow. All exports must stop. Now.https://t.co/5iskEdVqOt

— Kim Johnson (@KimJohnsonMP) May 8, 2025

Andy McDonald, MP for Middlesbrough and Thornaby East, described the move as “unconscionable” given the “serious allegations of war crimes, apartheid and even genocide” being levelled against "Israel".

Major donors, MPs accuse government of double standards

The reaction among Labour’s core supporters signals a deeper frustration with the government’s stance on Gaza and its perceived double standards. As Vince noted, the stark contrast between Britain's sanctions on Russia and its pursuit of deeper ties with "Israel" has become increasingly difficult to justify for many within the party.

Clive Lewis, MP for Norwich South, echoed these sentiments, “It’s one thing to wring your hands in anguish about what’s happening and say there’s very little that you can do whilst America has Trump in office. It’s quite another thing to prioritise a trade deal with Israel. There’ll be millions of people in this country who will be scratching their heads, and who will be frankly angry at this.”

Trade ambitions clash with voter sentiment in key districts

The controversy comes at a politically sensitive time. Labour is already facing pressure in key constituencies with large Muslim and Arab populations, such as Bradford, Birmingham, and parts of London, where the party lost seats to independents campaigning on Gaza during the last general election.

Polly Billington, MP for East Thanet, called for “public reassurances from ministers that a trade deal is off the table” until a permanent ceasefire is reached. She added, “Given the horrors that continue to unfold in Gaza, I am deeply concerned about the possibility of trade discussions with Israel at the moment.”

UK-'Israel' economic ties under scrutiny amid human rights concerns

The UK currently exports £3.2 billion in goods to "Israel", with pharmaceuticals, cars, and generators among the top products. In return, "Israel" exports £2.5 billion in goods and services to the UK, including vegetables, chemicals, and cleaning products.

While successive UK governments have pursued deeper trade ties with "Israel", Labour’s renewed efforts are now under heavy scrutiny. Critics argue that such deals risk legitimizing a regime accused of ongoing war crimes and could undermine Labour’s moral credibility and electoral prospects.

In a statement, a government spokesperson responded, “We strongly oppose the expansion of Israel’s operations. We want an immediate ceasefire, the release of all hostages, the urgent provision of humanitarian aid and a pathway to a political solution. We remain committed to securing the best trade deals that work for the UK, including with Israel."

But as the backlash intensifies, the government’s insistence on pushing forward may come at a growing political cost.