Reeves promises ‘deeper, more mature’ economic relationship with EU
Rachel Reeves has pledged to build a “deeper, more mature relationship” with European trading partners in the first speech by a UK chancellor to eurozone finance ministers since 2020.
Speaking to the Eurogroup in Brussels on Monday, Reeves also brushed off the suggestion that Britain must choose between closer ties with the US and EU as Donald Trump prepares to return to the White House.
Reeves said her address to the group, the first by British chancellor since Brexit, marked “the new UK government’s commitment to resetting our country’s relationship with our friends and allies in the European Union” as she drew a line under “fractious” relations with the bloc under the previous Conservative government.
“Division and chaos defined the last government’s approach to Europe,” she continued. “It will not define ours.”
Reeves said this “reset in relations” would support the new government’s economic targets by increasing investment, lowering prices and creating better jobs.
She highlighted three key areas of the UK-EU relationship: tackling “shared challenges” like the war in Ukraine, championing free trade as a driver of economic competitiveness and bolstering bilateral economic partnerships.
Reeves called for a “mature, business-like relationship where we can put behind us the low ambitions of the past and move forward”.
The Chancellor cited financial services as an area for increased cooperation, saying: “The UK has deep global capital markets that can fund the growth that economies across the continent need [which is] vital to help all our industries and innovative entrepreneurs access finance, grow and stay in Europe.”
She added that the UK and EU “must work together, because the reality is that our financial markets are highly interconnected, and collectively ensuring financial stability is a prerequisite for economic growth.”
Some EU officials have signalled a reluctance to revising trading relations with the UK while ministers continue to rule out rejoining to the single market and customs union or returning to freedom of movement.
Andrew Griffith, the shadow secretary of state for business and trade, argued Reeves should “jump on a plane to the US and talk to Trump about getting a US-UK trade deal done”, rather than “trying to take Britain backwards into the slow-growth EU”.
However, Reeves reiterated prime minister Keir Starmer’s comments last week that he would not pick sides between the US and EU during Trump’s second term.
The president-elect has committed to tariffs on EU and UK imports of 20 per cent, raising concerns of a potential trade war as Starmer looks to shield the British economy.
“We should not make false choices in this new world,” Reeves argued, saying the notion “that somehow we’re either with America or the EU is completely wrong”.
“Yes, the UK will always remain committed to our relationship with the US,” she added. “And there is so much potential for us to deepen our economic relationship on areas such as emerging technologies.”
Last month, Bank of England governor Andrew Bailey also called for the UK to “rebuild relations” with the EU “while respecting the decision of the British people” who voted to leave in 2016, in some of his strongest comments yet on Brexit.
Sean McGuire, director for Europe and international at the CBI, welcomed Reeves’ commitment to deepen trading ties with the US.
“By putting in the diplomatic ‘hard yards’ now, the government can start the process for unlocking the untapped potential of our trading relationship with the EU as part of its focus for delivering sustainable growth,” he said.