Reeves argues for deeper trade partnership with EU

Chancellor Rachel Reeves has made the case for a deeper trade relationship with the EU, describing it as "the biggest prize".

Sir Keir Starmer's government has consistently worked to "re-set" the relationship with Brussels following Brexit in January 2020, although he has pledged not to return to the single market, customs union or free movement.

Reeves said further integration with the UK's biggest trading partner would drive economic growth and improve security in a speech at the London School of Economics on Wednesday.

The Conservatives and Reform UK claimed Labour was trying to "betray" the Brexit result, while the Liberal Democrats called for the UK to instead rejoin the customs union.

The Labour government has struck four trade agreements since coming to power in 2024, with the EU, the US, India and, most recently, South Korea, in December.

Speaking at an event to mark Brussels-based economic think tank Bruegel's 20th anniversary, Reeves said: "The biggest prize is clearly with the EU."

"The truth is economic gravity is reality," she added, explaining that half the UK's trade was with the EU, almost as much as with "the whole of the rest of the world combined".

"I strongly believe that Britain's future is inextricably bound with that of Europe's – for economic reasons, but also reasons of security, resilience and defence," she said.

That means Britain should align with EU regulatory standards where it is in its national interest, she said, because "we want to make Europe as strong as possible, and that means not putting up the drawbridge".

Her stance against protectionism is informed by the global economic volatility US President Donald Trump has unleashed by imposing tariffs and sparking trade wars over the last year.

Trump has also upended the US relationship with Nato and the EU, provoking a scramble by European nations to boost defence, with Sir Keir spearheading efforts to build a Coalition of the Willing ready to secure peace in Ukraine in the absence of the US.

Critics claimed Reeves was trying to overturn the Brexit result, with Sir Mel Stride, the Conservative shadow chancellor, saying: "It's no secret that Reeves and Starmer have wanted to row back on Brexit since day one.

"Labour is desperate to blame anyone but themselves for their economic failures."

Reform UK's Suella Braverman insisted closer alignment with the EU would mean the UK becoming an EU "rule taker".

She said: "Labour has been hellbent on eroding Brexit and never accepted the result of the referendum.

"They have been searching for any reason to unravel the greatest democratic vote in Britain's history.

"The Prime Minister must stand firm and honour the promise he made to voters in the last general election that joining the single market or the customs union is off the table."

In contrast, Liberal Democrat leader Sir Ed Davey said Labour was not going far enough and should instead make a decisive move back towards partnership.

He said: "The Government finally admits that we need to fix to grow our economy, so why on earth do they keep ruling out the best way to make it happen?

"A new Customs Union would help families and pensioners struggling with the cost of living, turbocharge British business, and raise billions for the NHS.

"The Chancellor needs to stop just talking the talk and start walking the walk."

The Green Party was contacted for comment.

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