Labour can win political argument for closer EU ties, says Rachel Reeves

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Rachel Reeves has insisted Labour can win the political argument for a closer relationship with the EU, calling it the “biggest prize” for UK economic growth.Some Labour strategists have been wary of making the case for stronger alignment with the EU, believing it could alienate pro-Brexit voters.But Reeves said on Wednesday: “I am confident this is a political argument, as well, that we can win.” She pointed to the recent agreement to rejoin the Erasmus student exchange scheme, calling it “one of the most popular things that we’ve done.”Underlining the overriding importance of EU trade for the health of the UK economy, because of the bloc’s close geographical proximity, she said: “Economic gravity is reality, and almost half of our trade is the EU.

”“I’m all up for doing deals with India and the US and South Korea, but none of them are going to be as big as what we can get with better trade relations with Europe,” she added,“The biggest prize is clearly with the EU, and we have made progress there,”The chancellor was speaking at an event in London on European security, organised by the Bruegel thinktank,Its director, Jeromin Zettelmeyer, asked whether the UK would like to see a Swiss-style agreement, which could involve agreeing to abide by EU rules and standards for key industries,“Further integration will require further alignment, but I’m up for that,” the chancellor replied.

“We are keen to go through at sectoral level what sectors we could have alignment in.”She added: “Some of that could be unilateral and some of it could be negotiated.But there’s big opportunities.”Reeves stressed the areas already under discussion with Brussels as part of Labour’s UK-EU “reset”, including a food and farming agreement, a youth mobility scheme, and how the UK will participate in the EU’s carbon border adjustment mechanism, are just “first base”.The government is due to carry out a review of the trade and cooperation agreement with the EU signed by Boris Johnson in 2020 by the end of this year, and a summit on the “reset” between the two sides is due in the coming months.

Reeves’s plan for aligning with EU rules in some sectors echoed recent comments by Keir Starmer.Both have rejected the idea of a customs union, however, which would preclude the UK from forging its own trade deals with non-EU countries.Rejoining either a customs union or the single market was ruled out in Labour’s general election manifesto.Reeves also underlined the importance of working closely with the EU – and other like-minded countries – in other areas, citing the Canadian prime minister, Mark Carney’s recent speech at Davos, in which he called on middle powers to work together.“Britain’s future is inextricably bound with that of Europe’s: for economic reasons that I’m primarily responsible for as chancellor, but also reasons of security, resilience and dependence,” she said.

The chancellor also urged her European colleagues to press ahead with cooperation on defence procurement, saying: “Russia is not going to sit on the sidelines and wait for the next Ecofin [meeting of EU finance ministers, which Reeves also attends].”The shadow chancellor, Sir Mel Stride, said: “It’s no secret that Reeves and Starmer have wanted to row back on Brexit since day one.“Labour are desperate to blame anyone but themselves for their economic failures.Under increasing pressure from their own soft-left colleagues following the Mandelson scandal, Starmer and Reeves would rather point the finger at Brexit than accept their poor choices have been a disaster for our economy.”Reeves was speaking before the release of official data on economic growth for the final quarter of 2025 on Thursday morning.

With recent survey data signalling optimism in some sectors, the Treasury is hoping for an upturn in the coming months, after six cuts in interest rates.In a message on X sent to support Starmer as his premiership appeared to be in jeopardy on Monday, the chancellor said: “Interest rates are falling.The conditions for the economy to grow are there.” She told the Bruegel conference she was optimistic about recent signs of an uptick in productivity growth.

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