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Rachel Reeves has admitted that closer ties with the European Union is the “biggest prize” for Britain.

The Chancellor said she “strongly believes” the UK’s future is “inextricably bound” to Europe’s at an event on Wednesday hosted by Brussels think tank Bruegel. Ms Reeves heaped praise on the Government’s trade deals with India and the US but said “the biggest prize is clearly with the EU”.

She added: “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 continued: “We’ve been working really intensely to rebuild that trust that was lost…and I do believe that we’ve made big progress in that area.”

Sir Keir has made cosying up to the EU a key mission of his government despite 17.4 million people voting to exit the Bloc.

The Daily Express’s Give Us a Proper Brexit crusade has called for leaving the European Convention on Human Rights (ECHR), slashing red tape for businesses and enforcing a 12 mile exclusion zone around the UK for British vessels only.

Nigel Farage, Boris Johnson and Kemi Badenoch have backed the campaign ahead of the 10th anniversary of the referendum.

Shadow Chancellor, Sir Mel Stride said: “It’s no secret that Reeves and Starmer have wanted to row back on Brexit since day one. Labour are desperate to blame anyone but themselves for their economic failures. Under increasing pressure from their own soft-left colleagues following the Mandelson scandal, Starmer and Reeves would rather point the finger at Brexit than accept their poor choices have been a disaster for our economy.”

Ms Reeves also used the event at the London School of Economics to say there could be more to announce in the “coming weeks” on increased European cooperation on defence spending. EU commissioner for finance Valdis Dombrovskis held high-level talks with Ms Reeves and EU Minister Nick Thomas-Symonds last week.

EU trade commissioner Maroš Šefčovič and UK Business Secretary Peter Kyle are also understood to have discussed Britain re-joining the defence fund when they met last week.

Talks for Britain to join the £130billion security action for Europe’s defence fund collapsed in November 2025 amid claims the Bloc had set too high a price on entry, with France blamed for the breakdown.

But it was reported that there was greater appetite on all sides for a deal with the UK to join a future round of negotiations following Donald Trump’s threats to take over Greenland and criticism of Nato.

Ms Reeves said: “On defence, we don’t want to create more barriers. We want to be bringing those barriers down. We want to greater integrate supply chains, not damage them by taking a sort of inward-looking approach.

“But I don’t think any Chancellor actually believes we are getting the value for money that we should. Things like interoperability, joint procurement, not every country in Europe having different specifications when they’re buying equipment – the potential there is huge.”

Ms Reeves called for “greater collaboration” with nations that have “shared interests”.

The Chancellor said: “Further integration will require further alignment. I’m up for that. Keir’s government is up for that.” The Prime Minister suggested earlier this month he wanted to “go further” in moving Britain closer to the EU single market as he cranked up his plot to reverse Brexit. This is despite a manifesto promise not to rejoin the EU single market or customs union.

It comes ahead of the next UK-EU summit, which is expected to take place in May. The Liberal Democrats recently won a vote in parliament, with the backing of Labour rebels, supporting a return to the customs union.

The UK is already lining up with Brussels on some rules around food and agriculture to allow access to the economic European trading zone. Joining the EU’s single market would eliminate trade tariffs between Britain and the EU but Westminster would have to follow rules set by Brussels and accept free movement of people.