Labour’s Shadow Chancellor, Rachel Reeves, has made a compelling case for a renewed focus on strengthening the UK’s relationship with the European Union, asserting that closer ties with the bloc represent the “biggest prize” for the nation’s economic growth. Speaking at a Bruegel think tank event in London, Reeves contended that the geographical proximity of the EU is crucial for UK trade, which sees nearly half of its transactions occurring with European partners.
A Shift in Labour’s Position
Historically, some within Labour have hesitated to advocate for enhanced alignment with the EU, fearing it might alienate pro-Brexit constituents. However, Reeves expressed her confidence that the party can successfully navigate this political discourse. “I am confident this is a political argument that we can win,” she declared, referencing Labour’s recent decision to rejoin the Erasmus student exchange programme as a popular move.
Reeves articulated the necessity of fostering robust economic relations with Europe, emphasising that while deals with countries like India, the US, and South Korea are important, they cannot rival the potential benefits of improved trade with the EU. “The biggest prize is clearly with the EU, and we have made progress there,” she stated.
Proposals for EU Alignment
During the event, Reeves responded to questions about a possible Swiss-style agreement that would involve adhering to EU regulations for key sectors. She indicated her willingness to explore further integration, saying, “We are keen to go through at sectoral level what sectors we could have alignment in.” This could involve both unilateral actions and negotiated agreements.
The Shadow Chancellor outlined various initiatives currently under discussion with Brussels, such as a food and farming agreement and a youth mobility scheme, describing these as merely the starting point for a broader “reset” of UK-EU relations. The government is set to review the trade and cooperation agreement established in 2020 by the end of this year, with a summit anticipated in the coming months to discuss these developments.
Balancing Trade and Sovereignty
While Reeves has signalled support for aligning with EU rules in certain sectors, both she and Labour leader Keir Starmer have dismissed the notion of rejoining a customs union or the single market, as outlined in Labour’s election manifesto. These arrangements would limit the UK’s ability to pursue independent trade deals with non-EU nations.
Moreover, Reeves highlighted the importance of collaboration not just with the EU, but also with other nations that share similar values. She echoed sentiments from Canadian Prime Minister Mark Carney’s recent address at Davos, which called for middle powers to unite in addressing global challenges.
A Call for Defence Cooperation
Addressing security issues, Reeves urged her European counterparts to expedite cooperation on defence procurement, underscoring the urgency posed by Russia’s actions. “Russia is not going to sit on the sidelines and wait for the next Ecofin meeting,” she warned, advocating for a proactive approach to European security.
In response, Sir Mel Stride, a Conservative MP, critiqued Reeves and Starmer for wanting to “row back on Brexit,” arguing that Labour is attempting to shift the blame for economic struggles onto Brexit rather than accepting responsibility for their own missteps.
As the UK awaits official data on economic growth for the final quarter of 2025, Reeves remains optimistic about signs of recovery, especially following a series of interest rate cuts. She took to social media to reinforce her support for Starmer amid political challenges, stating, “Interest rates are falling. The conditions for the economy to grow are there.”
Why it Matters
Reeves’ advocacy for closer ties with the EU comes at a pivotal moment for the UK economy, as the nation grapples with the consequences of Brexit and seeks new avenues for growth. Her emphasis on collaboration with European partners not only addresses immediate economic challenges but also positions Labour as a forward-thinking party ready to embrace a pragmatic approach to international relations. The forthcoming decisions on trade and cooperation agreements will be crucial in determining the future trajectory of the UK’s economic landscape.
