Brexit has not been good for Britain, Rachel Reeves has said, arguing that the UK must align more closely with the EU.
The chancellor was unequivocal in her criticism of Britain’s EU exit and said there is now “an awful lot we can do to improve our trading relations”.
As Britain battles flatlining economic growth and ongoing fears over the cost of living, Ms Reeves argued that closer ties with the EU is the “biggest prize” economically.
It comes ahead of the chancellor’s Mais Lecture in the City of London, where she is expected to make the case for closer ties with the bloc, as well as focusing on artificial intelligence and regional growth.
Ministers have been ramping up their attacks on Brexit in recent months, particularly ahead of last year’s Budget, saying the decision to leave the EU had an even bigger impact on Britain’s economy than critics predicted, in an attempt to draw a dividing line with Reform UK.
Speaking to The Times, Ms Reeves said: “Brexit has not been good for our country, for growth, for prices in the shop. It’s almost 10 years since we voted Leave. That ship has sailed, but there’s an awful lot we can do to improve our trading relations. Where that requires alignment in our national interest, we should absolutely align.”
The chancellor said she recently met with a supermarket boss and the head of a major conglomerate, both of whom argued that Brexit has caused significant economic pain.
“These are two huge businesses saying it’s difficult for us and it pushes up prices and costs, but for small businesses, it is really challenging.”
Her remarks come as Sir Keir Starmer prepares a bill which would hand ministers powers to bring the UK into alignment with EU law, in an attempt to reduce paperwork and boost growth in Britain.
The bill, which will be brought forward this year as part of No 10’s plan for a Brexit “reset”, would give ministers overarching powers to bring the UK in line with EU law in certain areas, such as food standards, animal welfare and pesticide use – a process known as dynamic alignment.
The chancellor also told The Times that she wants an “ambitious” youth mobility scheme with the EU, which will enable young people from the bloc to live and work in Britain and vice versa.
Ms Reeves said the negotiations are currently “live”, but insisted it will not represent a “return to free movement”.
The chancellor’s campaign for closer ties with the EU occurs as the world battles the increasing turbulence and economic shocks due to the escalating conflict in the Middle East.
There are fears the war could hit the cost of living around the world, after Brent crude, the global benchmark for oil prices, jumped to more than $100 (£76) a barrel earlier this week for the first time since 2022, contributing to higher fuel bills and the risk of increased household energy costs across the UK.
Meanwhile, official figures revealed economic growth flatlined in January, heightening fears that soaring fuel and energy prices could tip the struggling UK economy into recession, and piling pressure on the chancellor to ensure that households are protected.
But Ms Reeves argued that Britain is better placed to ride out the turbulence because the economic choices she has made have put the UK in a better fiscal position.
“It does show that we were right to do what we did the first year and a half because we are in a much stronger position economically and fiscally to deal with this than we would have been if it had happened 18 months ago,” she said.
“I feel that very strongly. When I came in, there was no money left. Interest rates were too high. Our borrowing costs were too high. They were much higher than other countries and they were not coming down. And it’s taken a year and a half to get us into that better place.”
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