Reeves Declares Closer EU Ties as UK's 'Biggest Prize' for Economic Growth

Chancellor Outlines Vision for UK-EU Economic Future

Chancellor Rachel Reeves delivered a pivotal speech at the London School of Economics on Wednesday, February 12, 2026, asserting that a deeper economic relationship with the European Union represents the 'biggest prize' for the United Kingdom's prosperity. Her address, made at an event celebrating the 20th anniversary of the economic think tank Bruegel, underscored the Labour government's commitment to fostering a more pragmatic and beneficial post-Brexit relationship with the bloc. Reeves' remarks build upon previous statements, including an address to the Eurogroup in Brussels on December 9, 2024, where she also advocated for a 'business-like relationship' to boost mutual growth prospects.

Economic Imperative for Deeper Engagement

Reeves highlighted the undeniable 'economic gravity' of the UK's relationship with its European neighbours. She pointed out that 'almost half of our trade is with the European Union,' equating to nearly as much as the UK trades with the rest of the world combined. This significant volume of trade forms the core of her argument for closer ties, which she believes will:

• Boost overall economic growth.
• Break down existing barriers to trade.
• Create new opportunities for investment.
• Facilitate businesses in selling goods and services across markets.

The Chancellor stressed that improving this relationship is not a 'zero-sum game' but rather a pathway to enhancing growth prospects for both the UK and the EU.

Strategic Alignment and Policy Red Lines

In her vision for a closer relationship, Reeves indicated that deeper integration would necessitate 'further alignment' with EU regulatory standards in areas where it serves the UK's national interest. This strategic alignment aims to reduce trade barriers and provide businesses with greater confidence to invest. However, Reeves firmly reiterated the Labour Party's established 'red lines,' confirming that there will be no return to the European Single Market, the Customs Union, or the reintroduction of freedom of movement. This approach seeks to optimize economic benefits within the existing post-Brexit framework.

Beyond Trade: Security and Defence Cooperation

Beyond purely economic considerations, Reeves also emphasized the importance of strengthening cooperation with European countries on matters of security and defence. She stated that Britain's future is 'inextricably bound' with that of Europe, not only for economic reasons but also for collective security and resilience. The Chancellor highlighted the potential for improved value for money through collaborative efforts in areas such as interoperability and procurement within defence spending, signaling a broader scope for partnership with European allies.