Squeeze guitarist and lyricist Chris Difford got the idea for this song after looking at a photograph of an old lady sitting in a bar in Paris in 1936. Says Difford: "'Labeled With Love' was an adult lyric in a way that the older generation could latch on to and understand. My mother absolutely loved it. The story is about the end of a relationship after the war. I'd been reading about American soldiers in Britain during the war who married English girls and whisked them off their feet to the States."
Elvis Costello produced this track, which has a distinctly Country sound. Glenn Tilbrook, who is Squeeze's other guitarist and writes their music, wrote this in a Country style and Costello pushed it in that direction. Says Tilbrook: "I had been listening to some Hank Williams before, but Elvis really broadened my knowledge of Country music. It was one of those barriers you cross when you think something is square and horrible but then discover it has a heart beating inside. I discovered there were loads of great artists who I'd avoided listening to because I lumped all Country music together."