Reeves says closer EU ties is the ‘biggest prize’ – Daily Business

Chancellor Rachel Reeves has given the strongest signal yet of a desire for closer relations with the EU in in a speech referring to “deeper integration” with the bloc.  

Setting out the government’s case for closer economic and security ties with its nearest neighbours, Ms Reeves acknowledged the scale of trade with the EU compared with other markets.

“The biggest prize is clearly with the EU,” she said at an event at the London School of Economics. “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.”

In a message to hardline Brexiteers as well those calling for the Brexit deal to be negotiated, she added: “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.” 

With global trade facing increasing fragmentation, Ms Reeves made clear that Britain would resist the turn towards protectionism and instead seek to bring down barriers to trade with trusted partners.

This includes the EU, with the Chancellor confirming that Britain will align with EU regulatory standards where it is in its national interest, removing barriers to trade and giving businesses the confidence to invest.  

The resetting of relationships with the EU is a central pillar of the Chancellor’s “securonomics” approach to build resilience through stability, investment and reform at home while tearing down barriers to trade abroad.  

Tom Brufatto from the economics research group Best for Britain, said:  “This is the most significant intervention from the UK government on the prospect of aligning our service sectors with the EU, going beyond just goods.

“The Chancellor is right to say that ‘the biggest prize’ is a comprehensive deal with the EU. Our economic modelling, carried out by Frontier Economics, shows that the greatest GDP growth – and therefore the best opportunity to tackle the cost of living – comes from aligning on both.”

Its research shows that deep alignment in both goods and services could grow GDP by 1.7% to 2.2%. Alignment on goods alone would still boost GDP by 1% to 1.5%, with manufacturing-heavy regions seeing the biggest gains.

Ms Reeves also placed importance on security and defence benefits from closer ties with the EU.

“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.  

“On defence, we don’t want to create more barriers. We want to be bringing those barriers down. We want to greater integrate supply chains, not damage them by taking a sort of inward-looking approach. 

“But I don’t think any Chancellor actually believes we are getting the value for money that we should. Things like interoperability, joint procurement, not every country in Europe having different specifications when they’re buying equipment – the potential there is huge.” 

The Chancellor was speaking at an event on security in Europe held by Brussels-based economic think tank Bruegel to mark its 20^th anniversary.