Chancellor Rachel Reeves has insisted that Labour can win the political argument for a closer relationship with the European Union, describing stronger alignment with the bloc as the “biggest prize” for UK economic growth. Speaking at a London event on European security organised by the Bruegel thinktank, she said she was confident the case could be made, pointing to the popularity of the recent agreement to rejoin the Erasmus student exchange scheme.
Reeves emphasised the overwhelming importance of EU trade due to geographical proximity, noting that “almost half of our trade is the EU.” While open to deals with India, the US and South Korea, she argued none would match the benefits of better trade relations with Europe. “The biggest prize is clearly with the EU, and we have made progress there,” she added.
Asked whether the UK would seek a Swiss-style agreement involving alignment with EU rules in key sectors, the chancellor replied: “Further integration will require further alignment, but I’m up for that.” She stressed that discussions on a food and farming deal, a youth mobility scheme and participation in the EU’s carbon border adjustment mechanism were just the “first base” of a wider reset. However, she ruled out rejoining the customs union or single market, as set out in Labour’s manifesto.
Reeves also underlined the security dimension, echoing Canadian Prime Minister Mark Carney’s call for middle powers to cooperate. She urged European colleagues to press ahead on defence procurement, warning that “Russia is not going to sit on the sidelines.”
Shadow Chancellor Sir Mel Stride accused Labour of wanting to “row back on Brexit since day one,” claiming the government was blaming Brexit for its own economic failures. His comments came as the Treasury awaited official growth data for the final quarter of 2025, with Reeves expressing optimism over recent signs of improving productivity and falling interest rates.
