Ian Murray has founded the new Scottish Labour for the Single Market group with the former leader of the party in Scotland, Kezia Dugdale and MEP Catherine Stihler.
Speaking on the BBC’s Good Morning Scotland programme, he said: “It’s very difficult as the EU keeps saying to have your cake and eat it and that’s what the Prime Minster and the Leader of the Opposition seem to want to do.”
He said Mr Corbyn was “further ahead” of Theresa May in his Brexit position and welcomed the recent announcement that Labour would seek to form a new UK-EU customs union to ensure tariff-free trade after Brexit.
However, Mr Murray said the EU has repeatedly made clear it will not negotiate a bespoke deal for the customs union.
He said: “The single market and the customs union is quite clearly the only way you can resolve some of these issues.”
Questioned if the formation of the new group is a bid to upstage Ms Dugdale’s successor Richard Leonard at the Scottish Labour conference this weekend, Mr Murray said: “It’s got absolutely nothing to do with the leadership of the UK or the Scottish Labour parties...It’s an attempt by the grassroots of the Labour Party to come together and the tell the leadership of the Labour Party that the least worst option for the country of leaving the European Union is to stay in the single market and the customs union.”
Mr Leonard has already faced calls for the party to back permanent single market membership at its upcoming conference.
Ten of Scotland’s 73 Constituency Labour Parties (CLPs) have passed motions urging the conference to support the UK retaining permanent membership of the European single market and customs union.