Reeves must move beyond honeyed words to improve relations with the EU

Labour keeps talking about ‘resetting’ the UK’s fraught relationship after Brexit – but has so far shown little sign of taking meaningful steps towards that end, writes James Moore

Closer relations between the UK and the European Union will boost economic growth, said chancellor Rachel Reeves, kicking off her visit with EU finance chiefs, today.

Her European colleagues don’t need her lecturing them on that point – they know it as well as she does. But there’s a problem with the Labour government continually talking about its desire for a “reset” with Europe after the chaos, controversy, pettiness and hostility that characterised the various Conservative administrations that preceded it.

A case in point. When the EU made the offer of a youth mobility scheme, which had a lot to offer Britain’s young people, as well as their peers in the EU, Sir Keir Starmer immediately rejected it. The prime minister also said he had “no plans” to rejoin the Erasmus student exchange scheme earlier this summer.

You could argue that his aims with this were political and necessary, to show he was committed to his “red lines” – no return to freedom of movement, in particular – to counter criticism of Brexit backsliding from the likes of Reform. But here’s the thing: they would deem almost any concrete attempt to improve relations, and help the British economy by doing so, as backsliding.

With polling indicating strong public support, Labour would do better to show some leadership by making a positive case to the domestic audience, rather than attempting to appease people for whom nothing will ever be good enough. That is not least because warm words can’t disguise the reality: UK asks, such as reducing the bureaucracy small businesses face when exporting to the bloc, will necessitate trade-offs and acceding to some of the other side’s asks.

Yes there are advantages to the EU in playing nice – particularly with Donald Trump re-entering the White House and promising to impose punitive tariffs, while tearing up regulations to boost American competitiveness. But the UK stands to gain far more.

The severity of Brexit’s impact on its economy is hard to overstate, and prompted a highly unusual intervention from the Bank of England governor Andrew Bailey, who said while he took no position on the decision to leave the EU “per se”, he felt he had to “point out the consequences” for the British economy which it is weighing on.

Reeves may have been buoyed by a recent, relatively upbeat assessment from the OECD, but that economy still needs help. Consumer and business confidence remain low and the labour market is showing signs of difficulty. That was underlined by the latest jobs report from accountancy firm KPMG and the Recruitment & Employment Confederation, which reported “further deterioration of UK labour market conditions”.

The number of job vacancies, it said, “declined at a sharp and accelerated pace during November”. It was the 13th successive month in which a fall in staff demand was registered. “The latest drop was the greatest recorded for over four years. An especially severe drop in demand was seen for permanent workers,” it continued.

Part of this can be explained by Reeves’s decision to increase employer national insurance contributions (NICs), thus taxing jobs. But it’s not just that. Accountants’ organisation, the BDO, said business confidence had fallen to its lowest level since January last year, with companies facing “faltering consumer demand”, in addition to increased costs.

If Starmer and Reeves are to deliver their promises on growth, they need all the help they can get. When it comes to Europe, they could start by helping themselves.

In many ways they are selling a lie. Those consequences Bailey talked about can be mitigated with a more sincere effort than either Starmer or Reeves have (so far) been prepared to make. But to really make the British economy sing requires taking a step almost no one in British politics has the courage to make the case for: rejoining the EU – or, at the very least, the single market. (Privately, I suspect that they are well aware of that fact.)

A serious effort at mitigation when the new European Commission is ready to roll should at least involve accepting things like common standards, rather than embracing difference for the sake of it. But also a rethink of visas for young people and of Erasmus.

There is increasing scepticism in European capitals over whether Starmer and Reeves really mean what they’ve been saying. It’s time to stop the playacting.