Reeves says closer integration with EU is ‘biggest prize’ in Brexit shift

Rachel Reeves has to signalled that Labour will push further and harder on reversing the worst aspects of Brexit, claiming that closer integration with the EU is the “big prize”.

The chancellor, who was part of the campaign for a second referendum to stop Brexit, told an audience at the LSE on Wednesday that the UK needs to be more closely integrated with one of the bigger blocs in a turbulent world.

She said that while relationships with the US and China are important, neither is more important than the “one on our doorstep”, signalling plans to go much further than last year’s reset in relations with Brussels, unveiled by prime minister Sir Keir Starmer.

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Ms Reeves said: “A closer economic relationship with the EU isn’t about choosing sides but about geography.

“There are three big economic blocks: US, China and Europe. We will always seek every opportunity to grow our economy, and these trading relationships, but ultimately only one of these is on our doorstep, and so the biggest prize is closer integration with Europe.”

It comes days after Labour London mayor Sir Sadiq Khan described reversing Brexit as the “ultimate goal”, while both the chancellor and prime minister have made it clear Brexit will be a dividing line with Nigel Farage’s Reform UK at the next election.

In addition, many now believe that the removal of former Downing Street chief of staff Morgan McSweeney, following the scandal over the hiring of disgraced peer Peter Mandelson despite his known links to paedophile Jeffrey Epstein, has removed a major block to reversing Brexit.

While the government has set manifesto red lines against rejoining the EU, its single market or customs union, talks are underway on several fronts, including closer alignment on defence, regulations, and a youth visa scheme that would make it easier for Britons and Europeans to work and live abroad.

Talks are being led by one of Sir Keir’s most trusted lieutenants, Cabinet Office minister Nick Thomas-Symonds.

But Ms Reeves’s words come as she prepares for her spring statement update, still looking for ways to increase economic growth after the economy flatlined under her watch.

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Earlier this week, health secretary Wes Streeting released private messages between himself and disgraced former Labour peer Lord Mandelson, which revealed he has been critical of Ms Reeves’ economic policy. “We don’t have a growth strategy,” in wrote, in a scathing analysis of the chancellor’s brief.

The intervention also comes as Sir Keir attempts to renew his government in the wake of the Mandelson scandal and a fresh one involving his former aide Lord Matthew Doyle, who he elevated to the House of Lords despite knowing he had campaigned for a paedophile.

Sir Keir saw off an attempted coup this week when Scottish leader Anas Sarwar called for him to go.

But he is now looking for policies to build back support for his premiership on the Labour benches, where a pro-EU stance is popular.

Ms Reeves’ speech does represent a shift in tone for the chancellor, who had been trying to dissuade colleagues, including Mr Streeting, from pushing for customs union membership.

The Lib Dems recently won a vote in parliament, with the backing of Labour rebels, supporting a return to the customs union.

But at the World Economic Forum summit in Davos last month, Ms Reeves urged cabinet colleagues to stop floating the idea of a closer union, insisting Britain could not “go back in time”.

Pro-EU campaigners have welcomed the shift in emphasis and called on Labour to go even further.

Dr Mike Galsworthy, chair of the European Movement UK, said: “It is time now to state the obvious. Let's set a course to join the EU, listening to what the majority of this country's citizens want, to rip red tape away from our businesses, open mobility for talent, inspire our youth, secure our defence and reassert our British-European values.

“The majority of the British public now favour EU membership. The time to start that conversation is long overdue. Imagine what that would do for investment, for the energy of this county, for our sense of purpose. And now look again at how inadequate the concept of 'closer ties' is.”