Closer UK and EU ties will boost growth, says Reeves

Closer relations between the UK and the European Union (EU) will boost economic growth, Chancellor Rachel Reeves will tell finance leaders on Monday.

In the first address by a British chancellor to the Eurogroup since Brexit, Reeves will say that a "reset" in relations would mean "breaking down barriers to trade" as well as helping "businesses sell in each other's markets".

While Labour has ruled out re-joining the trade bloc, it has repeatedly said it wants the UK to "deepen ties" with the EU.

The Conservatives said the chancellor should instead be working out how to reverse the "devastating Budget measures that have crashed confidence".

The British Chambers of Commerce (BCC), which represents about 50,000 businesses, said that in order for the economy to grow "we must export more" but UK firms "are struggling under huge regulatory and paperwork burdens".

At the Eurogroup finance ministers meeting in Brussels, Reeves will propose building a "mature, business-like relationship" between Britain and the EU.

Ahead of the meeting, Reeves told journalists that she would be fighting for the "British national interest", but that "means having closer relationships, particularly trading relationships".

Growth is not a "zero sum game", she added, saying that both the UK and EU countries have struggled over the past decade.

"We all want to see our economies grow faster and be more competitive globally".

While this speech is not expected to result in any changes on Labour's manifesto promise not to re-join the EU's single market or customs union, it is likely to mean an agreement on food and farm exports, with the UK having said it is seeking a veterinary agreement.

It could also mean less red tape on more complex pan-European supply chains in manufacturing and textiles, but big trade-offs may be necessary.

The EU would like to see a scheme for young Europeans to live and work both there and in the UK - something Sir Keir Starmer has ruled out in the past.

Closer alignment to European food standards could also complicate any attempt by the UK to forge closer relations with the US on Donald Trump's re-entry into the White House in January.

Last month in a highly unusual move, the governor of the Bank of England, Andrew Bailey, said that the UK must "rebuild relations" with the EU.

The governor has avoided commenting on Brexit because of the Bank's independence from Westminster politics.

"The impact on trade seems to be more in goods than services," Mr Bailey said. "But it underlines why we must be alert to and welcome opportunities to rebuild relations while respecting that very important decision of the British people."

The export of goods, such as in food and farming, has been impacted by new trade barriers. But services, including banking, have performed better than expected.

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