The Chancellor insists that trade with the EU is more important than with any other partner such as the US
The UK Government will consider signing up to follow EU rules to help boost the economy even without getting anything in return from Brussels, Rachel Reeves has revealed.
The Chancellor said that closer trading ties to the rest of Europe would be her priority ahead of striking new deals with non-European countries.
She has rejected the idea, supported by some in Labour, of rejoining the EU’s customs union and is instead calling for greater integration with the single market which is meant to reduce trading barriers between countries.
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The calls will please MPs and others who want to see further progress in the post-Brexit “reset” of relations between Britain and the EU, but risk angering those who already accuse the Government of undermining the result of the 2016 referendum which saw the UK leave the bloc.
‘UK’s future is bound with Europe’
Speaking at the London School of Economics on Wednesday, Reeves said: “I strongly believe that Britain’s future is inextricably bound with that of Europe’s. And that is for economic reasons that I’m primarily responsible for as Chancellor, but also reasons of security, resilience, and defence.”
She added that on trade “the biggest prize is clearly with the EU”, adding: “The truth is economic gravity is reality, and 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.
“And so I’m all up for doing deals with India and the US and [South] Korea, but none of them are going to be as big as what we can get through better trade relations with Europe.”
The Chancellor admitted that getting closer to the EU would mean adopting more of Brussels’ regulations in certain sectors – including potentially on a unilateral basis to enable European companies to do business in the UK.
‘I’m up for further integration’
She said: “I think further integration will require further alignment. But I’m up for that. My Government, Keir’s Government, is up for that, and we are keen to go through a sectoral level of what areas we think we could have deeper alignment in. And some of that could be unilateral and some of it could be negotiated, but I think there’s big opportunities there.”
Reeves pointed specifically to financial services as one area of opportunity, suggesting that the City of London should be a hub for the whole continent not just for Britain.
The Chancellor also suggested that global instability encouraged by Donald Trump made it more necessary for other Western allies to work together on the economy as well as security. She said: “I actually support the idea of some sort of made-in-Europe, or made in countries that share each other’s values, I think that is sensible and precautionary in the times that we live in.”
“I think if we can make as broad a club as possible, and I don’t think it makes sense to exclude the UK, or Norway, or indeed Canada from schemes that are trying to achieve something which I think is in all of our interest.”
She called for faster action on defence co-operation, warning that Britain and other countries should “crack on” with ramping up spending on the military and setting up joint procurement efforts.