Rachel Reeves has delivered her most forthright declaration yet on Britain's relationship with the European Union (EU), asserting that the nation "belongs" within the continental bloc.
Addressing delegates at the National Growth Debate conference on April 21, the Chancellor positioned strengthened EU ties as one of three major opportunities facing the country.
"There are big power blocs in the world. Our closest power bloc is in Europe and that is where we belong," Ms Reeves said.
The remarks represent a notable departure from her previous commentary, which had centred primarily on the economic advantages of closer Brussels relations.
TRENDING
Stories
Videos
Your Say
She described EU nations as "our closest neighbours, our biggest trading partners", adding that the relationship also concerns "the sort of country we want to be".
The Chancellor drew a direct connection between the ongoing conflict in the Middle East and the case for regulatory alignment with Brussels.
Ms Reeves argued that the Iran war has heightened concerns about rising prices, making it imperative to reduce unnecessary costs on trade.
"One of the things we're most worried about because of the conflict in the Middle East is the impact on prices," she said.
Rachel Reeves says UK “belongs” in Europe and backs closer EU alignment to cut prices
|GETTY
"If you load additional costs on exporters and importers, the costs are ultimately going to be borne by the consumer," she added.
By dismantling trade barriers through fresh agreements with the EU, the Chancellor said Britain could alleviate pressure on household budgets.
In sectors such as chemicals and food standards, she noted, the UK already follows European regulations but receives none of the commercial benefits due to existing trade obstacles.
Ms Reeves acknowledged that deeper integration would necessitate adopting additional EU regulations, though she maintained the trade-off would prove worthwhile.
LATEST DEVELOPMENTS
Pro-Brexit campaigners celebrate Brexit day | GETTY"Alignment should be the default position unless there are reasons not to," Ms Reeves said.
However, she said certain industries would remain under British regulatory control despite closer ties with Brussels.
Financial services, which she described as too vital to the national economy, would not be subject to EU oversight.
Similarly, artificial intelligence and technology regulation would remain within Westminster's control.
Beyond these protected sectors, Ms Reeves said alignment with European rules would present limited drawbacks.
"In areas like chemicals, in food standards, where we already align but get none of the benefits because we still have those trade barriers, it makes sense to align, and it would be good for business," she said.
The Chancellor's remarks come as Labour intensifies efforts to revise elements of the Brexit settlement negotiated by the Conservatives following the 2016 referendum.
Reports emerged last weekend that Sir Keir Starmer was considering an arrangement that would bring Britain into alignment with the EU's Single Market for goods.
The Chancellor previously backed a second Brexit referendum despite her Leeds West & Pudsey constituents voting to leave the Brussels bloc | TREASURYSuch a deal would require British firms to adhere to regulations determined in Brussels, without direct input into how those rules are set.
Ms Reeves has previously described Brexit as a "chaotic wrong turn" that inflicted "deep damage" on the economy and "suppressed investment".
Earlier this year, she said closer European ties represent "the biggest prize" available to policymakers seeking to restore economic growth.