Closer integration with the European Union is the “biggest prize” for Britain, Rachel Reeves has said.
The chancellor said closer alignment with the EU “is a political argument Labour can win” and closer ties with the bloc would boost trade and make things easier for businesses and cheaper for consumers.
Speaking at the London School of Economics, Reeves said: “The biggest prize is clearly with the EU. The truth is, economic gravity is reality. Almost half of our trade is with the European Union. We trade almost as much with the EU as the whole of the rest of the world combined.
“There are three big trading blocs in the world — there’s the US, there’s China and there is Europe. We want to make Europe as strong as possible, and that means not putting up the drawbridge.”
Sir Keir Starmer has maintained that rejoining the customs union was a red line, although he is open to closer ties on specific issues, such as food standards, animal welfare and pesticide use.
Reeves said: “My government, Keir’s government, is up for that, and we are keen to go through at a sectoral level what areas we think we could have deeper alignment in. Some of that could be unilateral, and some of it could be negotiated, but there are big opportunities.”
Reeves added that she believes that the UK rejoining the EU’s Erasmus scheme, which was announced late last year, is “one of the most popular things that we’ve done as a government”.
The comments will raise hopes on the soft left of the Labour party, which is feeling emboldened after Starmer was forced to head off a challenge to his premiership on Monday, that the leadership is eyeing a change in its stance on the EU.
They also mark a shift in Reeves’s language on Europe. Last month in Davos, she urged Cabinet ministers to stop floating the idea of a closer union, insisting Britain could not “go back in time”. Her comments were seen as squarely aimed at Wes Streeting, the health secretary, who suggested in December that Britain should join a customs union with Europe.
“The best way for us to get more growth into our economy is a deeper trading relationship with the EU,” he said. “The reason why leaving the EU hit us so hard as a country is because of the enormous economic benefits that came with being in the single market and the customs union. This is a country and a government that wants a closer trading relationship with Europe.
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“The challenge is any economic partnership we have can’t lead to a return to freedom of movement.”
Labour’s 2024 general election manifesto set out three so-called “red lines” regarding the EU. It stated: “There will be no return to the single market, the customs union, or freedom of movement.”