Chancellor Rachel Reeves has declared that stronger alignment with the European Union represents the “biggest prize” for UK economic growth, insisting Labour can win the political argument for closer ties despite concerns over alienating pro-Brexit voters.
Speaking at a Bruegel thinktank event in London, Reeves highlighted the recent agreement to rejoin the Erasmus student exchange scheme as a popular step. She emphasised that “economic gravity is reality” and that almost half of UK trade is with the EU, making it a more significant opportunity than deals with India, the US, or South Korea.
Reeves indicated openness to sectoral alignment with EU rules, comparing it to a Swiss-style agreement. She noted that discussions with Brussels on a food and farming deal, a youth mobility scheme, and participation in the EU’s carbon border adjustment mechanism are just “first base”. The government plans a review of the 2020 trade and cooperation agreement by year-end, with a summit on the “reset” expected soon.
However, Reeves ruled out rejoining the customs union or single market, as per Labour’s election manifesto. She stressed the importance of EU cooperation for security and resilience, echoing Canadian Prime Minister Mark Carney’s call for middle powers to work together. She also urged European colleagues to advance defence procurement collaboration, warning that Russia will not wait.
Shadow Chancellor Sir Mel Stride accused Labour of wanting to “row back on Brexit”, claiming they blame Brexit for their own economic failures. Reeves spoke ahead of official growth data for late 2025, expressing optimism about falling interest rates and signs of rising productivity.
