Speech delivered on the 9th of December 2024 in Brussels, Belgium by The Rt Hon Rachel Reeves MP.
Paschal, friends – thank you for inviting me today.
And let me pay tribute to you and the Eurogroup’s leadership…
…for steering Europe’s economies through the enormous challenges of recent years.
This is the first time a British Chancellor has attended a meeting of EU finance ministers since the UK left the EU.
And there could be no more important moment to do so, than now.
I hope this is a further a signal of the new UK Government’s commitment to resetting our country’s relationship with our friends and allies in the European Union…
… and the importance I place in realising the economic potential of our shared future.
We live in a world in flux, where old economic certainties are being swept away.
Economic dependencies have become – in Mario Draghi’s words – economic vulnerabilities.
The bloodiest conflict since WWII is tearing Ukraine apart.
And the burden of the last two decades of crisis…
…from the financial crash to high inflation to the impact of a changing climate…
…falling on the shoulders of working people.
So we, as the finance ministers of Europe, face an urgent question.
How do we drive growth to make working people better off?
How do we create a new consensus for economic policy…
…that will allow us to overcome the challenges we face…
… ensure our economies are competitive under global pressures…
…and deliver strong, secure, sustainable growth for the benefit of working people?
I want to use my remarks to argue that part of the answer to that question…
…must be a closer economic relationship between the UK and the EU, in three ways.
First, by confronting together shared challenges; including the war in Ukraine.
Second, by defending our collective belief that openness is the route to competitiveness.
And third, by deepening our economic ties.
The growth challenge
The Draghi and Letta reports were primarily focused on the EU.
But for the UK, they describe a world – and a set of challenges – that are deeply familiar.
A decades-long productivity puzzle.
Low investment.
An ageing population.
And a set of acute fiscal demands coming at a time of already-high public indebtedness.
In the UK, our response to the competitiveness challenges…
…is based on a strategy of stability, investment, and reform.
Stability means not just the political stability of a large majority and a five-year term…
… but adopting a new set of fiscal rules that require us to take tough decisions on spending, on welfare, and on tax…
…to restore public finances and balance the current budget.
Alongside stability comes investment, by increasing capital funding by over £100bn over five years…
…targeting high-growth areas like transport, infrastructure, and clean energy.
And we are delivering reform…
… through changes to our planning system to unlock housing and new infrastructure…
… policies to reduce economic inactivity, improve skills and bring people back to work…
… and a modern industrial strategy, to be published next year.
An economic strategy with a clear purpose in mind: to rebuild Britian and make every part of the country better off.
A strategy that is not simply about lines on a graph, but about more money in people’s pockets…
… public services that are there for people when they need it…
…and businesses creating wealth and opportunity for all.
Confronting shared challenges
As the UK and EU develop the next phases of our partnership…
… I believe it would be a profound mistake to believe that we are stronger alone.
Together, we’re home to over 30 of the world’s top 100 universities.
We comprise 24 of NATO’s 32 allies.
When we speak together at the G7 or the G20 as leaders on tackling climate change or promoting reform of the international financial institutions, the world listens.
But close as we are, I know that the last few years have been fractious.
Division and chaos defined the last government’s approach to Europe.
It will not define ours.
We want a relationship built on trust, mutual respect, and pragmatism.
A mature, business-like relationship…
…where we can put behind us the low ambitions of the past…
…and move forward, focused instead on all that we have in common…
…and all that we might achieve together to keep our countries safe, secure and prosperous.
And that starts with our support for Ukraine.
Russia is willing to accept any loss of life…
… ally with any regime…
… and violate any international norm in its illegal invasion.
And I’m proud of what we’ve contributed, working together with the EU and the G7.
We’ve stood united and collaborated strongly…
…to introduce a comprehensive, innovative package of sanctions …
…that are undermining Russia’s capacity to wage war.
And your efforts to unlock profits from Russian sovereign assets has enabled us to collectively develop the extraordinary revenue acceleration mechanism…
…to provide Ukraine with significant upfront support when they need it most.
I’m particularly proud of our cooperation with the Commission, and EU member states on the G7-led Oil Price Cap – we would not have been able to achieve our goals by acting separately.
And our efforts have been rewarded: these sanctions have cumulatively contributed to a 30% reduction in Russian state oil revenues in 2023 compared to 2022.
But we can’t stop there.
The UK and the EU must continue to stand strong alongside our partners in Ukraine and remain creative…
…coordinating our efforts to ramp up pressure on the Russian economy and starving Putin of the revenues he needs to fund his war.
And one of the ways we can do that is by working together as trusted partners on defence and procurement, as well as research and development.
That will give a strong demand signal to our collective European industries…
…giving them the certainty to invest, innovate, and ramp up manufacturing.
Once again, the UK and EU working together, to ensure our collective security.
Openness as the path to prosperity
But as well as a closer partnership on defence and security…
…I believe we must continue to make the case together for a crucial principle…
…the importance of free, open trade.
Of course, it would be naïve in today’s world to try to go back to the world of hyper-globalisation.
The shocks we have endured in recent years show that we have become too exposed to supply chain disruptions, disease and conflict.
But at the same time, it would be a profound mistake to abandon free trade.
Our citizens benefit significantly from all the investment, innovation, and lower prices that free trade brings.
Instead of putting up new barriers, our openness to global trade should be bolstered by strengthening our resilience at home…
… which we will do through our modern industrial strategy …
… by supporting our growth driving sectors and addressing risks to supply chains.
And that means working closer with our allies.
We should not make false choices in this new world. As our Prime Minister Keir Starmer said last week:
The idea that the UK, or indeed the EU, must choose between those allies…
…that somehow we’re either with America or the EU, is completely wrong.
Yes, the UK will always remain committed to our relationship with the US…
… and there is so much potential for us to deepen our economic relationship on areas such as emerging technologies.
And yes, we must also find the right way to build a stable, long-term relationship with China…
… where we recognise both the value of co-operation in addressing global challenges like climate change…
… but also the importance of robust challenge where needed.
But we want to and we will seek a deeper, more mature relationship with our European neighbours too after too many years of actively looking to move away.
We need ways to enhance our partnership, share our intelligence and find opportunities to co-operate on issues, including areas like economic security.
Bilateral ties
We are already working together well on common challenges…
…. with deeper trade between allies at the heart of economic competitiveness.
I believe that a closer economic relationship between the UK and the EU is about improving both our growth prospects.
It is not a zero sum game.
In the long-run, Brexit is expected to cause UK trade intensity to fall by 15%…
… and with goods exports between both the UK and EU continuing to remain below 2018 levels, this is impacting UK and EU economies alike.
I know from speaking to business that they want to see trade barriers reduced….
…And so, the reset in relations is about doing what is in the best interests of our shared economies.
Breaking down barriers to trade.
Creating opportunities to invest.
Expanding choice to consumers.
And helping our businesses to sell in each other’s markets…
… because it is business that is at the beating heart of our potential to grow…
… and the beating heart of our competitiveness and economic success.
That’s why I’m here today; that’s what our reset seeks to achieve.
So yes, we will implement our existing agreements with you in good faith…
We intend to build on those agreements to reflect our mutual interests.
And we will be more ambitious in taking practical steps to strengthen our economic relationship, benefiting both the UK and the EU.
Closer cooperation too on financial services is a great example of strength through openness…
… with the EU-UK Financial Services Regulatory Forum due to meet for the third time early next year.
Across Europe, we need to unlock private capital to invest in future growth.
The UK has deep global capital markets that can fund the growth that economies across the continent need…
…vital to help all our industries and innovative entrepreneurs access finance, grow and stay in Europe.
And we must work together, because the reality is that our financial markets are highly interconnected….
…and collectively ensuring financial stability is a prerequisite for economic growth.
The UK will always remain committed to high international standards of regulation…
…for the benefit of the real economy not just in the UK, but across Europe too…
… and not just in financial services, but across the economy…
… because openness to each other’s markets is a source of strength, not weakness.
Conclusion
Paschal, friends – I look forward to hearing your thoughts this afternoon.
This is a moment to reset our relationship.
Because in an age of geopolitical uncertainty…
…with trade barriers rising…
…we should remember the bigger picture.
The UK and EU share the same values and interests.
We are democracies with open economies and strong social protections.
In an uncertain world, we are neighbours and multilateral partners, with much to share and much to offer.
And I believe that through a closer economic relationship between us…
…we can not only overcome the shared challenges we face…
…but deliver security and prosperity for working people right across Europe.
Thank you.
Sources: THX News, HM Treasury & The Rt Hon Rachel Reeves MP.
