They have done it. The right wing of the Conservative party has won a historic victory. The UK will be a sovereign third country, with a limited trade deal with the EU. The UK, rightwingers believe, has been reconciled to its true history as a nation of offshore islanders.

But they have also failed, according to their own terms. Theresa Mays red, white and blue Brexit is long dead, and a bad deal turned out to be better than no deal. The EU will not be supplanted by a great new Europe where British trade flows unimpeded; there are now frictions and barriers, not least in services. Any serious deregulatory move by the UK will be met with EU retaliation.

In short, the UK has repatriated economic sovereignty and discovered that, far from allowing it to humble the EU, it has harmed itself. Leaders who supposedly stood up for the greatness of the renewed British nation have been revealed as champions of free trade who dont understand the modern economy and as boastful flag-waving nationalists who dont realise that great British rulers once looked down on such tinpot antics.

As things now stand, Brexit is a pointless gesture, a politics of headlines in which sovereignty is performed by bleating world-beating absurdities. Remarkably, four years on from the referendum, it is still a promise without a plan. We have broken out of one regime of international relationships into a holding position worse than what came before, but with the possibility of redemption or damnation, or, more likely, stagnation.

We might end up with a renewed plebiscitary and parliamentary democracy in which the people take back control, and not just from Brussels. But Boris Johnsons cronyist Tories make the EUs bureaucrats look like models of honest and transparent politics; their systematic mendacity, abetted by a loyal press and unconstrained by parliament, hardly inspires confidence. In fact, the legitimacy of the nation has been severely dented, and Northern Ireland and Scotland are likely to take leave of the sinking British ship of state.

In their failure as champions of free trade, the Brexiters have actually repeated a British failure of the 1950s, an attempt to create a western Europe-wide industrial free trade area that led instead to the UK seeking entry to the European Economic Community in 1961. Perhaps they might reach back even further into history, to the aspiration of an earlier generation of Tory press lords, who pushed for empire free trade in the 1920s and 1930s. These men who had power without responsibility, in Baldwins famous phrase also failed, as India and the dominions remained protectionist.

The imperialists and press lords of that era wanted to create a trading bloc to rival the United States; todays Brexiters would prefer a deal with the Americans, handing control to Washington rather than Brussels. But the US, even after Trump, is still protectionist and deeply committed to exporting low-standard foods.

There are some other options left for Brexiters. The strong expat tendency might suggest a Cayman Islands model: merging the UK with an archipelago of tax havens run from the Caribbean, to create an even bigger rentiers paradise than the one we already have.

As a last option, they may give up on the rest of the world, and focus on national renewal, on levelling up. But we already have some indication of how this is going. The creation of new national business is in reality contracts for cronies and dodgy startups angling for subsidies, while Brexiter businesses actually invest overseas. We should hardly be surprised that levelling up turns out to be a small pork-barrel fund for financing better bypasses.

Brexit has nowhere realistic to go, for Brexiters at least. Does it offer possibilities for Labour? For now the answer is no, given that Labours position is to be patriotic and prostrate. Indeed, Brexit is a potent reminder of the power of new conservative ideas in shaping Labours agenda. In the 1930s, Labour followed the Tories from being a party of free trade to one of imperial protection and then, to backing the EEC, and in the 1990s, to globalisation and the free market.

That pattern is being repeated with Brexit not merely by virtue of Labour voting in favour, but in accepting a propagandistic Tory analysis of its causes. Keir Starmer is straining to appeal to a mythical ur-Labour voter, constructed like a specimen of stone age man by Tory paleontologists of the red wall.

Yet the ideological maelstrom of Brexit gives Labour the opportunity to abandon old nostrums and re-energise itself with a new national mission and a new history of its own. The left needs to disabuse itself of the cosy and outdated notion that Britains ills are caused by imperial hangovers and a consequently incompetent upper-class elite. Labour needs to wake up and offer an alternative future to contest the Tory narrative one that amounts to more than just better welfare and more administrative competence.

Labour could start by being nostalgic not for a Tory past, but a Labour one: of greater equality, of common purpose, of strong trade unions, of rising wages, of meaningful work. Labour could embrace the idea of a refreshed democracy, of really taking back control of an anti-elite politics rather than a reheated technocracy. It could once again become the party that offers a national, collective critique of the elite and its power as it was from the 1930s into the 1970s and propose a policy of national reconstruction and equality. Labour should be the party that speaks in realities, not in celebratory fantasies, and seeks to create a truthful democratic politics, which is essential to any real programme of progressive change.

The one good thing to come out of Brexit is the bonfire of national illusions which is about to rage. It would be tragic if Labour were to try to put it out. For in its own way, Brexit has forced some essential understanding of Britains place in the world.

It is no longer even potentially top nation. It will not escape the orbit of Europe it never did, even at the height of its power. It must imitate far more than it innovates. Understanding these truths is crucial to a genuine national reconstruction, which should aim to create a real better country, not to fake being the best.

A policy of national reconstruction, for the foundational economy, for the support of better everyday life, needs to be built on a double critique of the failed policies of the past 40 years, and of the Brexit ultras seeking an even more disastrous turbo-Thatcherism. For Labour, this moment represents a historic political opportunity: a chance to rethink its own past, and write a new history for the British nation.

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The one good thing to come out of Brexit: a bonfire of national illusions - The Guardian