Rachel Reeves hails EU as 'biggest prize for growth'

“The biggest prize is clearly with the EU,” she said.

“The truth is economic gravity is reality. 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.

“There are three big trading blocs in the world – there’s the US, there’s China and there is Europe. We want to make Europe as strong as possible, and that means not putting up the drawbridge.”

The Chancellor confirmed Britain would align with EU regulatory standards where it serves the national interest, to reduce trade barriers for British businesses, such as with a long-promised food and drink deal.

Sir Keir Starmer has held regular summits with EU officials, established as part of the Government’s so-called “reset” of post-Brexit relations with Brussels.

The Prime Minister’s Brexit “red lines” include not rejoining the bloc, the customs union or the single market.

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However, the Labour Government has consistently tried to establish closer ties with the EU.

Earlier in February, Britain and the EU announced they were aiming to finalise negotiations on a youth mobility scheme in time for a joint summit later this year.

Ms Reeves’ comments came amid more poor economic figures, as Budget uncertainty and a lacklustre performance in December saw the economy record meagre growth in the final three months.

Official figures showed gross domestic product (GDP) rose by 0.1 per cent in the fourth quarter, following growth of 0.1% in the previous three months.

The Office for National Statistics (ONS) estimated the economy expanded by 0.1 per cent in December, dashing hopes of a year-end rebound.

The fourth quarter figures meant the economy grew by 1.3 per cent overall in 2025, up from 1.1 per cent in 2024 and the highest growth since 2022, but lower than the 1.4 per cent expected by the Bank of England and most economists.

Reeves admitted there was “more to do” to bolster the economy.

Speaking on a visit to the OpenReach training centre in Crawley, West Sussex, she said: “We can’t turn things around overnight, but we have created the conditions now for the economy to grow, and it is doing just that.”